Basis (cost basis)
What you paid for an investment, including commissions, used to compute gains for tax.
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Words beside it
- 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.
- Cost basis
What you paid, including commissions, used to figure the gain when you sell.
- Dollar cost averaging
Investing a fixed amount on a schedule regardless of price.
- Fixed costs
Costs a business pays regardless of sales volume: rent, salaries, insurance.
- Opportunity cost
What you gave up by choosing this over the next best thing.
- Stepped up basis
Inherited assets get a new cost basis at the date of death, erasing the gain for tax.
- Variable costs
Costs that rise with each unit sold: materials, shipping, processing fees.
- zero cost collar
This is a collar where the money you collect from selling the call pays for the put, so the whole setup costs you little or nothing up front.
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