# Cost Basis

*Saving & Investing — Finicade finance glossary*

Cost basis is what you paid for an asset including fees, and it's the number your taxable gain is measured against. Getting it wrong is expensive in both directions: forgetting that reinvested dividends raise your basis means paying tax twice on the same money. When selling part of a holding you usually get to choose the accounting method — FIFO, specific identification, average cost — and specific identification lets you sell the highest-basis shares first to minimise the taxable gain.

**Formula:** `Capital gain = Sale proceeds − Cost basis`

**Also known as:** tax basis, book cost, acquisition cost

**Related terms:** [Capital Gain](https://finicade.com/glossary/capital-gain), [Capital Loss](https://finicade.com/glossary/capital-loss), [Capital Gains Tax](https://finicade.com/glossary/capital-gains-tax), [Dividend Reinvestment (DRIP)](https://finicade.com/glossary/dividend-reinvestment), [Step-Up in Basis](https://finicade.com/glossary/step-up-in-basis)

Source: https://finicade.com/glossary/cost-basis