Cost Basis Realization

Definition ∞ Cost Basis Realization in digital assets refers to the act of selling or otherwise disposing of an asset, thereby establishing a taxable gain or loss based on its original purchase price. This event occurs when an asset’s ownership changes hands, and its value at the time of disposition is compared against the cost at which it was acquired. It is a crucial concept for calculating capital gains or losses for tax purposes. This process quantifies the financial outcome of an investment.
Context ∞ News related to cryptocurrency taxation and regulatory compliance frequently discusses Cost Basis Realization. Investors pay close attention to this concept for tax planning and reporting, especially after significant price movements. Understanding this principle is essential for navigating the financial implications of digital asset transactions.