cost basis

Definition

The original purchase price of an asset used to calculate capital gains taxes, proving that the IRS wants documentation of every financial decision you've ever made. Lose track of it and prepare for tax-time panic.

Example Usage

I couldn't find the cost basis for stocks I bought in 2015, so I'm either paying too much in taxes or committing accidental fraud.

Source: Tax accounting and investment tracking

Related Terms

Advanced

special purpose vehicle

A separate legal entity created for a specific financial purpose, often to isolate risk or achieve off-balance-sheet treatment. It's a corporate subsidiary with one job, usually something the parent company wants plausible deniability about.

💰 Finance / Accounting

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bargain purchase

Acquiring an asset or company for less than its fair value, creating negative goodwill that accounting standards make you recognize as immediate income. It's so rare that its existence suggests either incredible luck or terrible accounting.

💰 Finance / Accounting

Intermediate

refinancing

The process of replacing old debt with new debt, hopefully with better terms and lower interest rates, but sometimes just rearranging deck chairs on the Titanic. It's when you get a new loan to pay off existing loans, ideally saving money but definitely generating fees for banks. Homeowners do it to lower mortgage payments; companies do it to extend runway.

💰 Finance / Accounting

Beginner

current ratio

Current assets divided by current liabilities, measuring whether you can pay short-term bills with short-term assets. A ratio above 1.0 suggests solvency; below suggests you should probably start returning the recruiters' calls.

💰 Finance / Accounting

Beginner

duty-free

Products sold without government taxes at airports and border zones, creating the illusion of amazing deals while you're trapped in transit. The magical land where alcohol and perfume become 'affordable' because customs duties don't apply. Convinces travelers they're saving money while spending it on things they didn't need in the first place.

💰 Finance / Accounting

Intermediate

zombie company

A business that generates just enough revenue to service its debt but not enough to pay it down or grow, essentially the corporate undead. They're alive, but only technically.

💰 Finance / Accounting

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