Tax question? Stock sale?

Question

Here's my situation:
3/24/2005 bought 29 shares of a stock
6/8/2005 stock splits 3:1, so I gain another 58 shares
9/15/2005 bought 43 more shares
6/21/2006 sold 58 shares, so I still have 72 shares

I'm trying to enter the tax info for the stock sale that occurred on 6/21/06, but I'm not sure how to do this under these circumstances. Any help would be greatly appreciated.

Answer 1

take the original cost of your 29 shares bought on 3/24/05. divide by 87 shares (since this is the total number of shares you have after the stock split).

this is your cost basis per share. multiply it by 58 (number of shares sold) this is what you would report as your cost basis on Sch. D.

your proceeds were reported to you by 1099. this would be reported as a long-term capital gain or loss since you held the stock over 1 yr.

use this cost basis also when you sell the remaining 29 shs from 3/24/05.

when you sell the last 43 shares you would use the cost basis from the date of purchase, 9/15/05

Answer 2

If you want someone here to crunch the numbers, you'd have to say for each purchase what your purchase price was.

When you sold the 58 shares, did you specify which shares were to be sold?

If you did not specify which shares were to be sold, the first ones bought would be considered to have been sold (FIFO - first in, first out). Your cost bases on those 58 shares is 2/3 of what you paid for the original ones you bought on 3/24/05 - the other third is the value of the 29 shares from that purchase that you still have. So you'll report the sale as 58 shares of xxx, date of purchase 3/24/05, cost basis as described above, sale date 6/21/06, sale price whatever you got for the 58 shares. It will be a long-term gain or loss.

Keep your records on all of this - you'll need them if and when you sell the remaining shares.

Answer 3

You have a few options on this.

Option one:
Enter two different lines on SCH D, one for the sale of the first 29 shares and the cost basis of them from that purchase, then the sales price of 29 of the 72 you sold on 6/21 as your selling price. Then, on the second line, do the same for the remaining shares, based off of the stock price from your second stock purchase as a cost basis, and the selling price of the remaining 72 sold shares.

Option two:
Take the high and low of the stock from the three purchases and average them out. Then use that as your cost basis (per stock sold), on just one line of SCH D

Option one is the better way to go in this case since you have all the details you need to do it. Option two is usually reserved for incomplete purchasing records or for people who buy tons of stock little bits at a time (like walmart employees). Both are legal though!

Answer 4

The loss would cancel out the income. No tax due. Capital features is calculated based on the internet finished of your sales. You pay capital features once you report your earnings tax, and the quantities are pulled out of your annual assertion.