Definition - What does Adjusted Basis mean?
Adjusted Basis is the value assigned to an asset after the affects of all deductions or additions for improvements have been taken into consideration.
Testopedia explains Adjusted Basis
Ex: certain muni bonds are required to be adjusted for tax purposes. When a customer buys a muni bond at a premium, the cost basis must be adjusted down (amortized) for tax purposes. And when a customer buys an original issue discount (OID) muni bond the cost basis must be adjusted up (accreted) for tax purposes. In both cases, if the customer sells the bond prior to maturity, the adjusted basis is what is used to determine the customer's tax consequence.