Cost basis
The cost basis of any investment is the cost of the original purchase plus any commissions, fees, or subscriptions that accompanied the investment.
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Expanded Definition
The cost basis of an investment is the total cost of that investment, including the asset purchase, commissions, fees, and any other related costs. For tax purposes, the cost basis of an investment can be reduced by certain items. Most common are depreciation and depletion (e.g., oil, timber, minerals depletion allowances).
Accounting for cost basis reveals the true returns of investments, as high commissions or fees, either from high fee structures or frequent trading, reduce the net returns of the investment.
Do note, however, that dividends do not lower the cost basis of an investment, either when received in cash or when used to purchase new shares. A stock dividend, however, does adjust cost basis.
Compare: Cost of goods sold
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