Cost basis is simply a fancy term used to describe what you originally paid for a specific security, including commissions and other expenses. It is used to determine any capital gains or capital losses for tax purposes. Should we at some point determine it is a good time to sell a security, the difference between your cost basis and the selling price will impact your taxes.
In addition to the ease this can bring for you or your tax preparer when completing your tax return, it also offers us a more complete picture of your financial situation. Using cost basis ensures that we make decisions with as much information as possible.