Cost Basis and Taxes: What You Need to Know

March 01, 2018

1040 Tax form

If you sold or redeemed an investment during 2017, you’ll need to know its cost basis, which is usually the amount you paid for it, including any commissions, fees, reinvestments and original issue discount (OID). It may also include adjustments for sales, principal returns, mergers, splits and spinoffs.

Form 1099-B provides cost basis for securities you sold. Your tax professional uses this information to determine whether you had gains or losses from the sale of the securities.

Not all gains are taxed the same

If you’re facing taxes on capital gains, it’s important to know whether they’re considered short- or long-term. Gains on investments held 12 months or less are short-term and therefore taxed as ordinary income. Long-term capital gains, on the other hand, are taxed at a maximum 20% rate. 

Cost basis does not indicate how an investment is performing. For information on investment performance, contact your financial advisor. He or she can provide you more detailed performance reporting for your accounts and discuss options for how you prefer to receive cost basis and performance information in the future.

Important Information:

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. This content should not be depended upon for other than broadly informational purposes. Specific questions should be referred to a qualified tax professional.

Find a Financial Advisor

Find a Financial Advisor

Select a State and then enter a last name

    Tax Questions? Visit Our Tax Resource Center

    Taxes aren’t just for tax season. These resources can help you year-round.

    Read more

    2018 Tax Reform: What You Need to Know

    New laws are expected to go into effect after Congress passed tax reform. What does that mean for investors?

    Read more