Definition

Cost Basis Adjustment

Meaning ⎊ Modifying the recorded purchase price of an asset to account for tax events like disallowed wash sale losses.
Greeks.liveApril 1, 2026

Cost Basis Adjustment

A cost basis adjustment occurs when the original purchase price of an asset is modified for tax purposes due to specific events, such as the disallowance of a loss under the wash sale rule. When a loss is disallowed, that amount is added to the cost basis of the new, substantially identical position.

This adjustment ensures that the tax benefit of the loss is not permanently lost but rather deferred until the new asset is sold. This mechanism prevents taxpayers from creating artificial losses while maintaining economic exposure.

Accurate tracking of these adjustments is necessary for determining the correct gain or loss upon the final exit from the position. It adds a layer of complexity to accounting, particularly for active traders who engage in frequent transactions.

Proper adjustment ensures that the total tax paid over the life of the investment remains accurate.

Transaction Fees Adjustment
Automated Margin Adjustment
Tax Minimization Strategies
Insufficient Adjustment
Transaction Fee Deduction
Option Greeks Adjustment
Price Discovery Latency
Dynamic Risk Adjustment Factors

Glossary

Cost Basis

Asset ⎊ The cost basis of an asset, particularly within cryptocurrency, options, or derivatives, represents the original purchase price plus any associated expenses.