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Posted by Seth Breidbart on February 13, 2007, 10:48 pm
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> I bought 250 shares of Exxon in Oct 2001. Reinvested all
> dividends and paid tax on them. I just sold the original
> 250 shares earlier this year (2007), and realize I have to
> pay tax on the cap gain. I have always thought that the cap
> gain is based on the basis (original purchase cost,
> including commission) and the selling price (net, taking the
> commission into account).
>
> Question 1: Is this correct?
Yes.
> Question 2:
> Now I have umpteen lots of Exxon shares (each just a
> fraction over 1 share). What is the cost basis here? How
> can I calculate into the basis the taxes I already paid on
> these shares? Or can I not do that?
The cost basis is the amount you paid.
For instance, in March 2002 you got a $50 dividend. That
was used to buy 1.1 shares. Your cost basis for those 1.1
shares is $50. (You also paid taxes on the dividend, which
is irrelevant for this calculation.)
Seth
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Posted by Benjamin Yazersky CPA on February 12, 2007, 12:04 am
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> I bought some shares of a stock through Sharebuilder back in
> 2002. At the initial purchase, I bought $6.00 worth of
> shares. Over the years, I have bought more shares of this
> stock. Also over the years, my dividends have been
> re-invested back into the stock. I sold all shares of this
> stock in 2006.
>
> My question is what would my cost basis be? I know the $6.00
> is part of it. Do I also include the additional money I used
> to buy more shares over the years? Do I do anything with the
> dividends that were re-invested over the years?
Your basis is the purchase price + reinvested dividends
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by MyVeryOwnSelf on February 12, 2007, 12:04 am
Please log in for more thread options > I bought some shares of a stock through Sharebuilder back in
> 2002. At the initial purchase, I bought $6.00 worth of
> shares. Over the years, I have bought more shares of this
> stock. Also over the years, my dividends have been
> re-invested back into the stock. I sold all shares of this
> stock in 2006.
>
> My question is what would my cost basis be? I know the $6.00
> is part of it. Do I also include the additional money I used
> to buy more shares over the years? Do I do anything with the
> dividends that were re-invested over the years?
The cost basis is the total of all the amounts you mention:
the initial purchase, the additional purchases, and the
dividends that were re- invested.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bob Sandler on February 13, 2007, 1:30 am
Please log in for more thread options > I bought some shares of a stock through Sharebuilder back in
> 2002. At the initial purchase, I bought $6.00 worth of
> shares. Over the years, I have bought more shares of this
> stock. Also over the years, my dividends have been
> re-invested back into the stock. I sold all shares of this
> stock in 2006.
>
> My question is what would my cost basis be? I know the $6.00
> is part of it. Do I also include the additional money I used
> to buy more shares over the years? Do I do anything with the
> dividends that were re-invested over the years?
Your basis is the total amount you paid to buy the stock
over the years: the initial investment, plus the $6, plus
the additional money you paid to buy more shares, plus all
the reinvested dividends, plus any per-investment or
per-trade fees that you paid to ShareBuilder for your
purchases. The reinvested dividends are treated the same as
if you had taken the dividends in cash, then used the cash
to buy more stock.
Bob Sandler
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by BeanTownSteve on February 13, 2007, 5:02 pm
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> Question 1: Is this correct?
Yeah, but some caution is advised on the "Original" 250
shares. You will need to be sure that's the case
Instructions to your broker and their acknowledgment for
example. You can't just "say" these shares are the original
shares. Unless, of course, you held them in certificate
form and surrendered the certificate to complete the sale.
> Question 2:
> Now I have umpteen lots of Exxon shares (each just a
> fraction over 1 share). What is the cost basis here? How
> can I calculate into the basis the taxes I already paid on
> these shares? Or can I not do that?
The taxes you paid are taxes on the money you earned
(dividends). The fact that you chose to reinvest them is
irrelevant. The taxes would have been due regardless of
what you did with the money and have no meaning and no
bearing in your cost basis calculation. Your cost for these
"umpteen" lots is your total of your "umpteen" dividends
plus any transaction costs or fees they charged you.
Because you were reinvesting dividends doesn't mean you
didn't pay any fees, many stock reinvestment programs have
fees associated with the reinvestment of dividend although
they are generally small in dollar terms. Should be listed
on your "umpteen" statements.
Be mindful of short term gains/losses when you sell. The
recent quarters of dividend reinvestments will be within the
year when you sell and that means you'll need to separately
report those, including their separate cost basis.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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