COST BASIS AFTER A SPLIT

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I PURCHASED 200 SHARES OF STOCK XYZ IN 1996 AT $25/SHARE ALL DIVIDENDS WERE REINVESTED. A STOCK SPLIT 2-FOR-1 OCCURRED IN 1999 DOUBLING SHARES TO 400. IF I SOLD 100 SHARE IN 2019 AT $100/SHARE, WHAT IS MY COST BASIS?

NCperson

Level 15

if you are using "FIFO" basis, the cost basis of those 100 shares is $25 per share.

if you are using average cost basis or are identifying specific lots, you'd have to figure out the value of ALL the dividends that were reinvested.

Once you choose one method you can't ever change to the other.

tezamAuthor

Level 2

Thanks for the answer, but why can't I still add my total dividends reinvested as part of my basis even with FIFO?

NCperson

Level 15

because "FIFO" stands for first in first out.

You stated your originally purchased 200 shares which is now the equivalent of 400. 100 of those first 400 shares is what you sold under the FIFO method. the reinvested dividends have their own cost basis.