I held stock in a company that spun off a portion of the business as a separate entity--I was awarded stock in the separate entity. How do I classify the acquisition?

[tcmaclaren3]

The stock I sold is in two categories--the original award, and the stock acquired thru dividend reinvestment.  TurboTax choices for how acquired are 1. Bought, 2. Gifted, etc. How do I classify each?

[JohnB5677]

In both cases it will be BOUGHT.  The original shares will be devalued to give you a basis in the new shares from the spinoff. 

Original shares:  1000 @ $10 = $10,000

Several years later

Original shares:  1000 @ $15 = $15,000

New shares  1000 @ $5 = $5,000

Total Value is $20,000

$5000 for new shares is 25% of $20,000

25% of the original $10 is $2.50

Cost basis of the original shares is $7.50

Cost basis of new shares is $2.50

The stock you acquired by dividend reinvestment will have the value of the dividends that were deposited as their basis.