The tax basis is used to determine capital gains and capital losses for reporting purposes. The tax basis is the purchase price of a stock or bond, including any commission charged. This can be determined by several methods. For a purchased investment, it is the amount paid. If inherited, it is the value of the stock on the date of the original owner’s death. If received as a gift, the tax basis is the amount that was originally paid for the investment, unless the market value of the investment on the date the gift was given was lower.. It is necessary to determine your tax basis to calculate your net gain or loss.