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Understanding cost basis is an essential part of managing your investments and planning for taxes. It helps determine the capital gains or losses when you sell and can significantly impact your ...
The cost basis of an asset is important to you for two primary reasons – tax planning and investment planning. These two reasons are related because only with the proper investment planning can ...
The investor received a total of $4.06 in dividends over the year, all of which were reinvested, so the cost basis increased by $4.06. Cost Basis = $100 + $4.06 = $104.06; Capital gain/loss = $103.02 − $104.06 = -$1.04 (a capital loss) For U.S. income tax purposes therefore, dividends were $4.06, the cost basis of the investment was $104.06 ...
In financial accounting (CON 8.4 [1]), a gain is when the market value of an asset exceeds the purchase price of that asset. The gain is unrealized until the asset is sold for cash, at which point it becomes a realized gain. This is an important distinction for tax purposes, as only realized gains are subject to tax.
Unrealized gains and losses on available for sale securities [IAS 39/ "FAS 115" – "Accounting for Certain Investments in Debt Securities"] Gains and losses on derivatives held as cash flow hedges (only for effective portions) [IAS 39/ "FAS 133" – "Accounting for Derivative Instruments and Hedging Activities"]
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Basis (or cost basis), as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When a property is sold, the taxpayer pays/(saves) taxes on a capital gain /(loss) that equals the amount realized on the sale minus the sold property's basis.