I was in a firm's dividend reinvestment Program (DRIP) for
many years, leading to a total of 63 purchases over fifteen
years.
Last year, they executed a reverse split, which left me with a
non-integer number of shares. They sold off the fractional
share, sending me a check for the proceeds. This happened just
ten months after their last dividend payment, so it included
(as far as I can tell) both short- and long-term losses.
How do I apportion the proceeds between the two? Do I really
have to document every one of the 63 purchases in order to
show the basis for that fractional share?
It appears that Michael F. Stemper <michael...@gmail.com> said:
I was in a firm's dividend reinvestment Program (DRIP) for
many years, leading to a total of 63 purchases over fifteen
years.
Last year, they executed a reverse split, which left me with a
non-integer number of shares. They sold off the fractional
share, sending me a check for the proceeds. This happened just
ten months after their last dividend payment, so it included
(as far as I can tell) both short- and long-term losses.
How do I apportion the proceeds between the two? Do I reallyYou can use LIFO, FIFO, lowest cost, or specific lot cost basis.
have to document every one of the 63 purchases in order to
show the basis for that fractional share?
It sounds like you think you have to do average cost, which I don't
think is even permitted for stocks, only mutual funds.
LIFO usually gives you the lowest tax bill in the common situation
that the price of the stock generally appreciated over the years. It's
also pretty simple, just match up the fractional share with enough
DRIPs to cover it. Unless the share prices are very high I doubt
you'll need more than one or two dividends. Or if you want to make
it really easy, do it FIFO and use the price you paid for your original shares.
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
--
On Monday, January 31, 2022 at 11:49:52 PM UTC-5, John Levine wrote:
It appears that Michael F. Stemper <michael...@gmail.com> said:
You can use average cost basis for the "covered" shares in the DRIP.. (that is, those acquired in 2012 and later). Note that average cost basis for common stock is only available when the shares are part of a DRIP program, including those programs runby a brokerage.
Ira Smilovitz, EA
Leonia, NJ
On 2/1/22 4:13 AM, ira smilovitz wrote:run by a brokerage.
On Monday, January 31, 2022 at 11:49:52 PM UTC-5, John Levine wrote:[SNIP]
It appears that Michael F. Stemper <michael...@gmail.com> said:
You can use average cost basis for the "covered" shares in the DRIP.. (that is, those acquired in 2012 and later). Note that average cost basis for common stock is only available when the shares are part of a DRIP program, including those programs
Ira Smilovitz, EA
Leonia, NJ
Well Ira, I'm going to need a citation as I am not aware that average
cost is available for any shares of stock.
--
Alan
--
On Tuesday, February 1, 2022 at 7:50:01 PM UTC-5, Alan wrote:run by a brokerage.
On 2/1/22 4:13 AM, ira smilovitz wrote:
On Monday, January 31, 2022 at 11:49:52 PM UTC-5, John Levine wrote:[SNIP]
It appears that Michael F. Stemper <michael...@gmail.com> said:
You can use average cost basis for the "covered" shares in the DRIP.. (that is, those acquired in 2012 and later). Note that average cost basis for common stock is only available when the shares are part of a DRIP program, including those programs
Ira Smilovitz, EA
Leonia, NJ
Well Ira, I'm going to need a citation as I am not aware that averageI might have to look for the authoritative citation, but look at IRS Pub. 550, page 44 or any broker's instructions for cost basis assignment.
cost is available for any shares of stock.
--
Alan
--
Ira Smilovitz, EA
Leonia, NJ
--
On Tuesday, February 1, 2022 at 7:50:01 PM UTC-5, Alan wrote:run by a brokerage.
On 2/1/22 4:13 AM, ira smilovitz wrote:
On Monday, January 31, 2022 at 11:49:52 PM UTC-5, John Levine wrote:[SNIP]
It appears that Michael F. Stemper <michael...@gmail.com> said:
You can use average cost basis for the "covered" shares in the DRIP.. (that is, those acquired in 2012 and later). Note that average cost basis for common stock is only available when the shares are part of a DRIP program, including those programs
Ira Smilovitz, EA
Leonia, NJ
Well Ira, I'm going to need a citation as I am not aware that averageI might have to look for the authoritative citation, but look at IRS Pub. 550, page 44 or any broker's instructions for cost basis assignment.
cost is available for any shares of stock.
--
Alan
--
Ira Smilovitz, EA
Leonia, NJ
--
I might have to look for the authoritative citation, but look at IRS Pub. 550, page 44 or any broker's instructions for cost basis assignment.Well Ira, I'm going to need a citation as I am not aware that average
cost is available for any shares of stock.
--
Alan
--
Ira Smilovitz, EA
Leonia, NJ
--
The relevant authority is Section 403 of the Energy Improvement and Extension Act of 2008, Div. B of Pub. L. No. 110-343, 122 Stat. 3765.
Ira Smilovitz, EA
Leonia, NJ
It appears that Michael F. Stemper <michael.stemper@gmail.com> said:
I was in a firm's dividend reinvestment Program (DRIP) for
many years, leading to a total of 63 purchases over fifteen
years.
Last year, they executed a reverse split, which left me with a
non-integer number of shares. They sold off the fractional
share, sending me a check for the proceeds. This happened just
ten months after their last dividend payment, so it included
(as far as I can tell) both short- and long-term losses.
How do I apportion the proceeds between the two? Do I really
have to document every one of the 63 purchases in order to
show the basis for that fractional share?
You can use LIFO, FIFO, lowest cost, or specific lot cost basis.
It sounds like you think you have to do average cost, which I don't
think is even permitted for stocks, only mutual funds.
LIFO usually gives you the lowest tax bill in the common situation
that the price of the stock generally appreciated over the years. It's
also pretty simple, just match up the fractional share with enough
DRIPs to cover it. Unless the share prices are very high I doubt
you'll need more than one or two dividends. Or if you want to make
it really easy, do it FIFO and use the price you paid for your original shares.
On 31/01/2022 22.49, John Levine wrote:
It appears that Michael F. Stemper <michael...@gmail.com> said:
I was in a firm's dividend reinvestment Program (DRIP) for
many years, leading to a total of 63 purchases over fifteen
years.
Last year, they executed a reverse split, which left me with a
non-integer number of shares. They sold off the fractional
share, sending me a check for the proceeds. This happened just
ten months after their last dividend payment, so it included
(as far as I can tell) both short- and long-term losses.
How do I apportion the proceeds between the two? Do I really
have to document every one of the 63 purchases in order to
show the basis for that fractional share?
You can use LIFO, FIFO, lowest cost, or specific lot cost basis.
It sounds like you think you have to do average cost, which I don't
think is even permitted for stocks, only mutual funds.
LIFO usually gives you the lowest tax bill in the common situationOkay, that makes things simpler for that part of a share.
that the price of the stock generally appreciated over the years. It's
also pretty simple, just match up the fractional share with enough
DRIPs to cover it. Unless the share prices are very high I doubt
you'll need more than one or two dividends. Or if you want to make
it really easy, do it FIFO and use the price you paid for your original shares.
Two followup questions:
Do I need to list each of the 63 purchases when I fill out the 8949? Is
it possible to say something like "July, 2005 through October, 2020",
"Total of 320 shares", "Total price $7500"?
How do I document the reverse split? In other words, in January of 2017,
I bought 2.368 shares for $71.86. But, post-split, that was only 0.296 shares.
--
Michael F. Stemper
Isaiah 58:6-7
--
On Friday, February 4, 2022 at 10:10:28 AM UTC-5, Michael F. Stemper wrote:purchase and total the post-split amounts.
On 31/01/2022 22.49, John Levine wrote:
It appears that Michael F. Stemper <michael...@gmail.com> said:Okay, that makes things simpler for that part of a share.
I was in a firm's dividend reinvestment Program (DRIP) for
many years, leading to a total of 63 purchases over fifteen
years.
Last year, they executed a reverse split, which left me with a
non-integer number of shares. They sold off the fractional
share, sending me a check for the proceeds. This happened just
ten months after their last dividend payment, so it included
(as far as I can tell) both short- and long-term losses.
How do I apportion the proceeds between the two? Do I really
have to document every one of the 63 purchases in order to
show the basis for that fractional share?
You can use LIFO, FIFO, lowest cost, or specific lot cost basis.
It sounds like you think you have to do average cost, which I don't
think is even permitted for stocks, only mutual funds.
LIFO usually gives you the lowest tax bill in the common situation
that the price of the stock generally appreciated over the years. It's
also pretty simple, just match up the fractional share with enough
DRIPs to cover it. Unless the share prices are very high I doubt
you'll need more than one or two dividends. Or if you want to make
it really easy, do it FIFO and use the price you paid for your original
shares.
Two followup questions:
Do I need to list each of the 63 purchases when I fill out the 8949? Is
it possible to say something like "July, 2005 through October, 2020",
"Total of 320 shares", "Total price $7500"?
How do I document the reverse split? In other words, in January of 2017,
I bought 2.368 shares for $71.86. But, post-split, that was only 0.296
shares.
You can total all of the purchases that comprise a single sell transaction and use "Various" for the date purchased. (Remember to separate short term from long term.) You don't document the reverse split, per se. You apply the split ratio(s) to each
| Sysop: | Keyop |
|---|---|
| Location: | Huddersfield, West Yorkshire, UK |
| Users: | 292 |
| Nodes: | 16 (2 / 14) |
| Uptime: | 209:11:13 |
| Calls: | 6,618 |
| Files: | 12,168 |
| Messages: | 5,317,175 |