Can I use the adjusted close to determine my basis in stock sales when figuring out my capital gain?

Question

The adjusted close number is not something I figure out but use the number found at Yahoo finance.

I sold stock I inherited and know that the basis is the value of the stock on the date of death, but don't know if I use the actual closing price or the adjusted closing price. Trying to factor in the reinvested dividends and stock splits seem like a lot of work so using the adjusted close looked like an easy way to take into account these factors. Thanks.

Answer 1

In Yahoo!Finance, the adjusted close number is a way to compare the price of a stock before and after a stock split and/or dividend payment. It has no bearing on your capital gain. It's useful to see what the "real" close price was and without being influenced by dividends or splits.

For instance: Coca-Cola (ticker KO) had a dividend on 6/13/06 of $0.31 per share. The closing price on 6/12/06 was $43.31, but the adjusted close was $43.00. This is because you'd take out the price inflation that was due to the dividend.

It's more of an analytical tool then anything else.

In order to figure out your basis, you use the # of shares bought X the price per share + the brokerage fee (or commission) to buy the stock. Do not forget to include any dividends that you reinvested or any stock splits that occured. And don't forget to add in the brokerage charge for selling it to your basis as well.

Answer 2

Your basis is what you actually paid, not the closing price for the day. While most stocks stay pretty close to the same price in one day, some vary wildly. You need to check your records for your actual cost. Remember that any expenses paid such as commissions, or dividends reinvested that you've already paid taxes on, can be used to reduce your gain.

Answer 3

Your broking service must have information of the acquisition in his archives. He ought to provide them freed from cost, or cost you a "study" fee for the copies, counting on how good of a customer you're.