basis
Basis is the amount of money you already paid tax on inside an account, so the IRS will not tax it again when you take it out. Keeping track of your basis is important during a backdoor Roth conversion so you do not accidentally pay tax twice.
Where it is explained in full
Money at every level: what changes as the numbers grow, from a first paycheck to a hundred million. The rules are the same for everyone and the useful ones change at every level. This page walks the whole ladder, what becomes possible at each rung, and the one line that runs through all of it. It explains; it never advises.
How the wealthy pay less tax: the line between income and wealth, and the empty suite that does not exist. A friend earning two million a year asked how the very rich pay so little. The answer is not a secret and not a loophole. It is one line in the code, and everything else hangs on it. This page explains it, and corrects a story about commercial property that gets told at every dinner where the question comes up.
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Words beside it
- Basis (cost basis)
What you paid for an investment, including commissions, used to compute gains for tax.
- Cost basis
What you paid, including commissions, used to figure the gain when you sell.
- Stepped up basis
Inherited assets get a new cost basis at the date of death, erasing the gain for tax.
Ask about basis
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