From an income tax standpoint it doesn't matter if you reinvested the money received in a sale.  It is still taxable income.  For instance:  you bought 100 shares of ABC for $5000 in 2010.  You sell it 4 years later for $7500 and immediately invest the whole amount in XYZ.  You have a taxable capital gain of $2500, and your basis in XYZ is $7500.  The same is true when you reinvest dividends - the dividends are taxable income in the year received but the amount reinvested is added to the basis.  Example:  you paid $5000 for ABC stock, and in 2016 reinvested dividends of $150 to purchase more shares.  The $150 is taxable income now, but your basis is increased to $5150.