PrivateTechSharesCost basis
Also called: tax basis, basis
In one line
What you're treated as having paid for your shares for tax — the figure your taxable gain is measured from.
In plain English
Your cost basis is usually your strike price plus any amount already taxed as income at exercise. Your gain on a sale is the sale price minus this basis.
If you were explaining it to a 5-year-old
The price the taxman counts you as having paid for your toy. Your profit is what you sell it for, minus that number.
Why it matters when you sell
Getting your cost basis right is essential to calculating — and not overpaying — the tax on a secondary sale.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
Primary references for this term: IRS (US tax). Our definitions are written in plain English and kept evergreen — see the glossary methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.