What's My Basis in This Stock

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Topic Author
BlindPursuit
Posts: 32
Joined: Tue Jan 22, 2019 9:58 pm

What's My Basis in This Stock

Post by BlindPursuit »

Decades ago I bought 100 shares of a stock for $20/share. Over time the stock grew nicely to around $80/share (woohoo!). Then the stock split 3-for-1, so I had 300 shares at 80. The stock continued to grow all the way up to 160/share (!), at which point I sold 100 shares to pay for a home reno project.

For capital gains purposes, is my basis in the shares that I sold still $20, which is what I originally paid? Or could I say it's $80, since I basically got 200 shares worth $80 in the split (and then sold 100 of those)?

Nice problem to have either way!
Flora
Posts: 113
Joined: Sat Mar 26, 2016 6:19 am

Re: What's My Basis in This Stock

Post by Flora »

What basis did you report on Schedule D when you sold shares previously?
Topic Author
BlindPursuit
Posts: 32
Joined: Tue Jan 22, 2019 9:58 pm

Re: What's My Basis in This Stock

Post by BlindPursuit »

Flora wrote: Thu Jul 09, 2020 6:09 pm What basis did you report on Schedule D when you sold shares previously?
This is the first time I sold any of these shares.
typical.investor
Posts: 2294
Joined: Mon Jun 11, 2018 3:17 am

Re: What's My Basis in This Stock

Post by typical.investor »

BlindPursuit wrote: Thu Jul 09, 2020 6:03 pm Decades ago I bought 100 shares of a stock for $20/share. Over time the stock grew nicely to around $80/share (woohoo!). Then the stock split 3-for-1, so I had 300 shares at 80. The stock continued to grow all the way up to 160/share (!), at which point I sold 100 shares to pay for a home reno project.

For capital gains purposes, is my basis in the shares that I sold still $20, which is what I originally paid? Or could I say it's $80, since I basically got 200 shares worth $80 in the split (and then sold 100 of those)?

Nice problem to have either way!
If you are at Schwab, they have a cost basis tool which makes this relatively easy.

Between the number of shares you bought, have now, date bought, if dividends were reinvested, and price, you can figure it out even if some of those values are not strictly accurate. For example, you know you bought 100 shares and you know on a certain date you had 300, you can narrow down the range of when the purchase must have been made.
chem6022
Posts: 38
Joined: Sat May 11, 2019 9:19 pm

Re: What's My Basis in This Stock

Post by chem6022 »

Your cost basis is $6.67 on each of those shares. You're selling 1/3 of what you bought and you paid $2000 total. One-third of $2000 is $667.
typical.investor
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Joined: Mon Jun 11, 2018 3:17 am

Re: What's My Basis in This Stock

Post by typical.investor »

chem6022 wrote: Thu Jul 09, 2020 6:49 pm Your cost basis is $6.67 on each of those shares. You're selling 1/3 of what you bought and you paid $2000 total. One-third of $2000 is $667.
Were dividends reinvested? It’ll up you basis as they are purchased.
Topic Author
BlindPursuit
Posts: 32
Joined: Tue Jan 22, 2019 9:58 pm

Re: What's My Basis in This Stock

Post by BlindPursuit »

chem6022 wrote: Thu Jul 09, 2020 6:49 pm Your cost basis is $6.67 on each of those shares. You're selling 1/3 of what you bought and you paid $2000 total. One-third of $2000 is $667.
Ah, I see. That makes sense. So for tax purposes if I sold at 160 then I made $15,333 profit ($16,000 - $667) and I owe the capital gains tax on that amount, right?
chem6022
Posts: 38
Joined: Sat May 11, 2019 9:19 pm

Re: What's My Basis in This Stock

Post by chem6022 »

BlindPursuit wrote: Thu Jul 09, 2020 7:02 pm Ah, I see. That makes sense. So for tax purposes if I sold at 160 then I made $15,333 profit ($16,000 - $667) and I owe the capital gains tax on that amount, right?
Yes that's the gist of it. Also typical.investor is right that DRIP reinvestment would make it more complicated, but I'm assuming from your nice round numbers that is not the case here. Additionally, brokerage fees when you bought could increase the $2000 and you could add 1/3 of that to the $667 basis.
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