Cost Basis: Purchases

What this video covers

• The cost basis formula: purchase price plus commissions or fees paid to acquire the security, and why that $10 commission becomes $5,010 on 100 shares at $50
• Net proceeds on the sell side: sale price minus commissions or fees, and why the same commission subtracts instead of adds
• Calculating capital gain or loss: net proceeds minus cost basis, and the exact $980 gain on the LaserSharks worked example
• Why both commission adjustments favor the taxpayer: higher cost basis and lower net proceeds each shrink the taxable gain
• The double commission trap: how test writers sneak two separate commissions into one question and punish you for only adjusting one side
• The three identification methods for multiple lots: first in, first out (FIFO), last in, first out (LIFO), and specific identification
• Why FIFO is the automatic default when a question gives multiple purchase prices but never states which shares were sold