Definition ∞ Ethereum cost basis refers to the original price or value at which an investor acquired their Ethereum tokens. This metric is crucial for calculating capital gains or losses when the Ethereum is subsequently sold or exchanged. It includes the purchase price plus any associated fees. Accurate determination of cost basis is essential for tax reporting and investment performance analysis.
Context ∞ Understanding the Ethereum cost basis is a fundamental requirement for participants in the digital asset market, especially concerning tax obligations in various jurisdictions. As regulatory bodies increase their scrutiny of cryptocurrency transactions, precise record-keeping for cost basis calculations becomes increasingly important. News related to crypto taxation often emphasizes the need for investors to track their acquisition costs diligently.
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