What is “cost basis,” and why does Wealthfront need it to convert transferred investments to my Wealthfront portfolio?

“Cost basis” is the industry term for the purchase date and price you paid for your investments. The IRS website says “the basis of stocks or bonds you buy is generally the purchase price plus any costs of purchase, such as commissions and recording or transfer fees.” Fees that you paid to invest, dividend reinvestments, and corporate actions can also impact your cost basis.

Wealthfront uses your cost basis to manage your tax liability when converting your transferred investments to your Wealthfront portfolio. Specifically, we look at your purchase date and purchase price to ensure that we only sell investments you’ve held for more than a year (long­term gain), or when the investment is worth less than when you bought it (which is an opportunity to harvest a loss).

Learn more about how we manage your tax ­liability during account transfers here.

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