Cost Basis

For investors that purchase stocks or bonds, the cost basis will usually refer to the price paid for certain security, reinvestment amounts of dividends, capital gains distribution, or any other costs, fees, and commissions included in the transaction.

For the sake of the investor, and to simplify matters, a broker or fund manager will issue a cost basis form to investors once they have finalized the purchase of a security to ensure they have the necessary information at hand when the investors require to issue a claim or loss for tax purposes.

The cost basis can be found on the confirmation letter exchanged between you, the investor, and the fund or brokerage manager.

Important things to remember:

  • Cost basis is the original price one paid for a specific asset or security.
  • To calculate capital gains on assets and securities, investors can subtract the cost basis from the market value at the time of sale.
  • Depending on the investment, brokerage firm, or business that issued the securities, they can choose from different cost basis models to calculate the capital gains or losses.

Why use a cost basis?

Simply put, the cost basis model is used to help determine either a profit or loss on a specific asset or security, and whether to determine it’s liable for tax.

In some cases, when a business is sold, both the profit and losses of capital assets will need to be determined separately by using a cost basis asset model.

How helpful is this content?

Share this article:

Join a community of 350,000+ members

  • Gain access to unique offerings previously reserved for the ultra-wealthy

  • Customize your portfolio for income, growth, or a balance of both

  • Get started today and earn an average IRR of over 8%

What investors are saying about Yieldstreet

Apr 2022

The due diligence, risk management, and product education materials are thorough, excellent, and easy to use and understand.

Manoj J
Member since 2019
Apr 2022

Excellent and unique selections that I can't find elsewhere.

Jonathan S
Member since 2019
Apr 2022

The platform delivers in a very concise manner. Easy to get a clear understanding at a glance from the web or mobile app.

Tim S
Member since 2021
The testimonials presented on this page have been provided by actual investors in Yieldstreet funds without compensation. Yieldstreet has selected the testimonials, and certain testimonials have been edited to remove personally identifiable information and for brevity. Testimonials were not selected based on objective or random criteria, but rather were selected based on Yieldstreet's understanding of its relationship with the providers of the testimonials. The uncompensated testimonials presented here may not be representative of other investors' experiences, and there can be no guarantee that investors will experience future performance or success consistent with the testimonials presented.

The Yield

Our weekly podcast providing ideas about how to make money work for you and bring you closer to your dreams.

Since inception, over $2.5B has been invested on Yieldstreet

Join today for free to access alternative investment opportunities.