"Now the complications come in for the reinvested dividends if additional shares of stock were purchased with the reinvested dividends. You must year by year calculate and recalculate the basis of each share of stock by the numbers of shares owned and the income which those shares produced. That is where the frustration may enter the picture."
This is not an issue. if you find this frustrating, you are calculating it wrong.
Of course, as your share count goes up from reinvesting, your dividend goes up.
That's the power of compounding.
if you're tracking this yourself, See Pub 550 chapter 4 Table 1 for the records you have to keep to know the cost of the shares you sold. Selling shares is First In, First Out.
@JosephS1
