1. What is Total Cost Basis?

Total Cost Basis represents the total amount invested in an asset, calculated by summing the cost of all purchases. It's essential for determining capital gains or losses when selling investments.

2. How Does the Calculator Work?

The calculator uses the total cost basis formula:

Where:

• \( \text{Purchase Price} \) — Price per share in currency
• \( \text{Shares} \) — Number of shares purchased
• \( \sum \) — Summation of all purchase transactions

Explanation: For multiple purchases, calculate each transaction separately and sum them to get the total cost basis.

3. Importance of Cost Basis Calculation

Details: Accurate cost basis calculation is crucial for tax reporting, investment performance analysis, and making informed buy/sell decisions. It determines your taxable capital gains or losses.

4. Using the Calculator

Tips: Enter the purchase price per share in your local currency and the number of shares purchased. For multiple transactions, calculate each separately and add the results.

5. Frequently Asked Questions (FAQ)

Q1: What if I made multiple purchases at different prices?
A: Calculate the cost basis for each purchase separately using this calculator, then sum all the results to get your total cost basis.

Q2: How does cost basis affect taxes?
A: Cost basis is subtracted from the sale price to determine capital gains (taxable) or losses (may be deductible).

Q3: What about dividends reinvested?
A: Reinvested dividends increase your cost basis as they represent additional purchases of shares.

Q4: How do stock splits affect cost basis?
A: Stock splits adjust your number of shares and cost basis proportionally. Your total investment value remains the same.

Q5: What cost basis method should I use for selling?
A: Common methods include FIFO (first-in, first-out), specific identification, or average cost. Consult a tax professional for your situation.