1 basis | Definition of basis
Logo
Menu
dictionary thesaurus

basis

noun
ba·​sis | \ ˈbā-səs How to pronounce basis (audio) \
plural bases\ ˈbā-​ˌsēz How to pronounce bases (audio) \

Definition of basis

1 : the bottom of something considered as its foundation
2 : the principal component of something Fruit juice constitutes the basis of jelly.
3a : something on which something else is established or based stories with little basis in reality no legal basis for a new trial still some basis for hope selected on the basis of test scores
b : an underlying condition or state of affairs hired on a trial basis He is on a first-name basis with his customers.
c : a fixed pattern or system meets with us on a regular basis [=regularly] The department sends reports on a daily basis. [=every day]
4 : the basic principle concepts that form the basis of the country's economic policies
5 mathematics : a set of linearly independent vectors (see vector entry 1 sense 1a) in a vector space such that any vector in the vector space can be expressed as a linear combination of them with appropriately chosen coefficients (see coefficient sense 1)
Synonyms More Example Sentences Learn More about basis

Keep scrolling for more

Examples of basis in a Sentence

The company does not hire employees on the basis of their race, sex, age, or religion. the sole basis for the rumor is someone's overactive imagination

Recent Examples on the Web

 How is your work ethic and demeanor on a daily basis? — Edgar Thompson, orlandosentinel.com, "Gators coach Dan Mullen: Jachai Polite a cautionary tale for NFL early-entry candidates," 4 Sep. 2019 Perhaps no substantive issue has drawn more sustained focus from Mr. Trump of late than his steadily escalating trade fight with China, about which the president talks or tweets on a near-daily basis. — Michael Crowley, New York Times, "Trump Heads Into 2020 With No Clear Policy Agenda. But It May Not Matter.," 4 Sep. 2019 Other playoff-contending teams seem to generate more runs on a consistent basis. — Mark Gonzales, chicagotribune.com, "Cubs Q&A: Does Anthony Rizzo’s swing cause back problems? Do the Cubs use virtual reality hitting tools? Why rely so much on home runs?," 3 Sep. 2019 The conference, in its 9th year, centers around content marketing: helpful information -- like an article, a podcast, a video -- brands produce on a consistent basis that’s valuable its audience. — Mary Kilpatrick, cleveland.com, "What is content marketing? Here are five great examples," 27 Aug. 2019 The other four courses cover specific skills relevant to some of the most popular social media platforms that digital marketers use on a daily basis. — Noelle Ike, CNN Underscored, "SEO, social media, email: It's all covered in this 15-course digital marketing bundle," 26 Aug. 2019 The Wildcats have at least four backs, maybe five, who can contribute on a consistent basis. — Michelle Gardner, azcentral, "Arizona Wildcats football: Strengths and concerns for 2019 college football season," 23 Aug. 2019 After nine months of praying for them (ideally on a daily basis), the babies would then be born in the spring, and their birthdays would be celebrated in class with cake. — Liv Mcconnell, Teen Vogue, "What Spiritual Adoption of a Fetus in High School Really Taught Me," 23 Aug. 2019 All that stuff is awesome, just to be achieving your dream and living out your dream on a daily basis. — Albert Breer, SI.com, "32 Notes From 32 NFL Training Camps," 22 Aug. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'basis.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of basis

14th century, in the meaning defined at sense 1

History and Etymology for basis

Latin — more at base entry 1

Keep scrolling for more

Keep scrolling for more

More Definitions for basis

basis

noun

Financial Definition of basis

What It Is

Basis refers to the original price of an asset. It is sometimes called cost basis or tax basis.

How It Works

Let's assume you purchase 100 shares of Company XYZ stock for $5 per share and you pay a $10 commission for the purchase. Your basis would be:

(100 x $5) + $10 = $510

Income realized from the asset, including dividends and capital distributions (even if they are reinvested rather than received in cash) increase the basis. Thus, in the above example, if your stock paid a $1-per-share dividend every year for three years, your basis would increase to:

$510 + (100 x $1 x 3) = $810

Money spent on improvements to an asset (such as certain home improvements) are added to the asset's basis, and depreciation on the asset is subtracted from the cost basis.

Why It Matters

An asset's basis becomes very important when the owner sells the asset. The difference between the sale price and the basis is called a capital gain (if the sale price is higher than the cost basis) or a capital loss (if the sale price is lower than the basis). Capital gains are generally only taxable when the investor actually sells the asset. Realized losses can often offset these gains and thus lower the investor's potential capital-gains taxes. The length of time the asset is held, among other things, determines the tax effect of the gain or loss. Changes in tax rates also may influence an investor's concern about basis.

An asset's basis is usually based on its original purchase price, but sometimes people inherit assets rather than purchase them. In these cases, the basis of the asset becomes the value of the asset at the time the investor inherits it (this is called a step-up in basis).

Often, investors accumulate shares of the same stock at different prices over time. Because of this, when the investor sells some of the shares, he or she must identify which shares from the "inventory" were sold in order to calculate capital gains or losses. In general, investors want to minimize taxable gains by selling the shares with the highest basis first. However, if the investor cannot identify which shares are which, the IRS requires use of the first-in-first-out (FIFO) method, meaning that the investor must assume he or she first sells the shares that are held the longest. These older shares may not have the highest basis of the investor's inventory of shares, and thus the method could inflate the investor's tax bill.

Source: Investing Answers

adjusted basis

noun

Financial Definition of adjusted basis

What It Is

Adjusted basis refers to the increase or decrease in an asset's value due to depreciation or capital enhancements.

How It Works

From the time an asset is acquired until the time it is sold, an asset experiences a number of events which affect its value. These events can cause an increase or decrease in the asset's total value. An asset's adjusted basis takes the base price of an asset and adjusts it for changes in value reflecting enhancements and or depreciation. For instance, a given asset purchased for $100 that is sold one year later after having experienced $10 in depreciation and $50 in improvements would have an adjusted basis of $100 - $10 + $50 = $140.

Why It Matters

In the event an asset is sold, the adjusted basis is needed for tax purposes as it is used to calculate the capital gain or loss.

Source: Investing Answers

cost basis

noun

Financial Definition of cost basis

What It Is

Cost basis refers to the original price of an asset. Cost basis is sometimes called tax basis.

How It Works

Let's assume you purchase 100 shares of XYZ Company stock for $5 per share, and you pay a $10 commission for the purchase. Your cost basis would be:

(100 x $5) + $10 = $510

Income realized from the asset, including dividends and capital distributions (even if they are reinvested rather than received in cash) increase the cost basis. Thus in the above example, if your stock paid a $1-per-share dividend every year for three years, your basis would increase to:

$510 + (100 x $1 x 3) = $810

Money spent on improvements to an asset (such as certain home improvements) are added to the asset's cost basis, and depreciation on the asset is subtracted from the cost basis.

Why It Matters

An asset's cost basis becomes very important when the owner sells the asset. The difference between the sale price and the cost basis is called a capital gain (if the sale price is higher than the cost basis) or a capital loss (if the sale price is lower than the cost basis). Capital gains are generally only taxable when the investor actually sells the asset. Realized losses can often offset these gains and thus lower the investor's potential capital-gains taxes. The length of time the asset is held, among other things, determines the tax effect of the gain or loss. Changes in tax rates may also influence an investor's concern about cost basis.

An asset's cost basis is usually based on its original purchase price, but sometimes people inherit assets rather than purchase them. In these cases, the cost basis of the asset becomes the value of the asset at the time the investor inherits it (this is called a step-up in the basis).

Often, investors accumulate shares of the same stock at different prices over time. Because of this, when the investor sells some of the shares, he or she must identify which shares from the inventory were sold in order to calculate capital gains or losses. In general, investors want to minimize taxable gains by selling the shares with the highest cost basis first. However, if the investor cannot identify which shares are which, the IRS requires use of the first-in-first-out (FIFO) method, meaning that the investor must assume he or she first sells the shares that are held the longest. These older shares may not have the highest cost basis of the investor's inventory of shares, and thus the method could inflate the investor's tax bill.

Source: Investing Answers

WORD OF THE DAY

See Definitions and Examples

Get Word of the Day daily email!