Let’s assume that you paid $1,100 for 100 shares of XYZ stock. At the time you made the purchase, the stock was selling for $10 per share. Although you may think the basis of each share is $10, it isn’t. The basis of stock or mutual fund shares is usually the amount you paid for them, including any commissions or fees that you paid.
To figure the basis per share, divide the amount you paid by the total number of shares you bought:
$1,100 (amount paid) / 100 (total number of shares) = $11
This means that your basis is $11 per share. Commissions and fees accounted for the extra $100 that you paid.
If you received stock or shares of a mutual fund as a gift, then the basis is usually the amount the person who gave it to you paid for it plus some or all of any gift taxes paid depending on when the property was purchased. There are some situations, however, when the basis might be equal to the fair market value on the day you received the gift. For example, this will happen when the value of the stock is less than the donor’s basis on the date of the gift and you sell the stock for a loss. For more information, see the "Sale of Property" chapter in IRS Publication 17: Your Federal Income Tax.
If you inherited stock or shares of a mutual fund before 2010, the basis is usually the fair market value of the property on the day the person who bequeathed it to you died unless an alternate valuation date is elected by the executor of the estate. However, for taxpayers who inherited property from taxpayers dying after 2010 the basis in the inherited property is that of the deceased immediately before death. To learn more, see the "Sale of Property" chapter in IRS Publication 17: Your Federal Income Tax.