Finance: What is Tax Basis?

Tax basis is your cost for assessing how much you owe in taxes, and is determined by multiplying your gains by your tax rate.

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Transcript

00:22

stock is at thirty You decide whatever dot com is

00:26

now passe because a kardashians said so it'll be over

00:30

taken by whenever dot com and you want to sell

00:33

So you dio and you live in a thirty percent

00:35

marginal tax blue state And that is your federal tax

00:39

rates in twenty percent But then you add in ten

00:41

percent for state taxes and whatever's left for obamacare and

00:45

you pay about thirty percent tax on your gains Well

00:48

you paid twelve grand to buy the stock and after

00:51

the sale you took in thirty grand when you sold

00:55

it for a gain of eighteen thousand dollars Your tax

00:59

basis on those shares is twelve grand so you pay

01:04

thirty percent tax on the eighteen grand of gain or

01:08

fifty four hundred dollars to net from the sale of

01:11

thirty thousand dollars worth of stock How much Yeah twenty

01:15

Four thousand six hundred dollars He fancy math Had you

01:19

just gotten those shares free I'ii they were gifted to

01:22

you and you had no tax basis or a tax

01:25

basis of zero dollars a share Well then your gain

01:29

would have been from zero to thirty grand or a

01:31

gain of thirty thousand dollars to then be taxed at

01:34

thirty percent or nine grand in taxes to net just

01:38

twenty one thousand dollars after the sale So having ah

01:41

high tax basis or at least being able teo point

01:45

toe one saves you money when the tax man coming

01:48

and well that's pretty much it alright he's gone Now

01:51

you can all come out Come on it's Okay it's 00:01:53.698 --> [endTime] safe