basis

Basis is the value assigned to an asset, usually its purchase cost, and reflects the owner's investment. It generally includes the amount paid in cash, debt, services, or property, along with related costs such as commissions, taxes, transportation, and legal or transfer fees. This value may increase due to improvements or decrease through deductions like depreciation, resulting in an adjusted basis over time.

While often used interchangeably, tax basis refers specifically to basis as defined by tax rules. When based solely on acquisition cost, it is called cost basis, the most common type. For assets like stocks or bonds, basis typically includes the purchase price plus brokerage or transfer fees. In some cases, basis is determined by fair market value or the basis of a previous owner’s basis, such as with gifts or inherited property.

[Last reviewed in July of 2025 by the Wex Definitions Team] 

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