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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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