Your cost basis is what you paid to acquire an investment, used to work out your gain or loss when you sell. In the simplest case it is the purchase price plus buying costs such as commissions.
Tax is generally owed on the gain — sale proceeds minus cost basis — not on the total amount you receive. Example (illustrative): you buy 10 shares at $50 ($500 basis) and later sell them for $800. Your taxable capital gain is $300, not $800, because the $500 you originally invested is returned to you, not profit.
If you buy the same stock at different prices over time, you hold several tax "lots," each with its own basis. When you sell part of the position, which lots you sell determines the gain. In the US, brokers commonly default to first-in-first-out, but investors can often instead use specific-identification to choose particular lots — a lever behind tax-loss harvesting. Reinvested dividends add to basis; splits adjust it. These are US examples; rules differ by country.
Because your after-tax result depends on the gap between your cost basis and your exit price, exit timing and record-keeping are part of the real return — the same reason we treat holding period and exit levels as first-class. This is general education, not tax advice.
It is what you paid to acquire an investment — usually the purchase price plus buying costs. Subtracting it from your sale proceeds gives the capital gain or loss you may be taxed on.
Tax is generally owed on the gain (proceeds minus basis), not the full sale amount. Illustrative: buy for $500, sell for $800, and the taxable gain is $300. This is not tax advice.
You hold multiple tax lots, each with its own basis. Which lots you sell changes the gain. US brokers often default to first-in-first-out, but specific-identification may let you choose. Rules vary by country.
Browse all S&P 500 tickers to see this metric applied to individual companies.
Educational research only — not investment advice.