Cost basis for taxes is the original value of an item when it is purchased and it’s used to calculate capital gains tax. In simple terms, it’s the amount you paid for an item that you later sell or exchange. The cost basis is also important in determining how much depreciation you can deduct each year on an asset. When calculating your taxes, it’s crucial to get an accurate cost basis, as it will be used to determine your capital gains or losses. By keeping track of the cost basis of all your assets, you’ll be able to ensure that you pay the correct amount of taxes when you file.