Basis Definition

A foundation upon which something rests.

The base, foundation, or chief supporting factor of anything.

The chief constituent; the fundamental ingredient.

The principal constituent of anything.

The fundamental principle.

A set of independent vectors whose linear combinations define a vector space, such as a reference frame used to establish a coordinate system.

In the futures market, the difference between the cash and futures prices. For instance, if cash prices for cotton typically are 5 cents below the July futures price, the November basis is said to be “5 cents under.” Separately, basis also is used to calculate the amount of capital gains tax that is due on the sale of an investment or asset. The basis is calculated by taking the purchase price and subtracting any commissions or expenses.

The value of a taxpayer’s basis in an asset, after making additions or subtractions to his or her original basis, to reflect certain events, such as capital improvements and depreciation, that affect the value of the property subsequent to the taxpayer’s acquisition of or investment in the asset.

The basis of an asset transferred from one owner to another by gift or in trust at the time of the transfer.