how to figure dividend reinvesting for taxes?

Question

I purchased a stock about 10 years ago and have been reinvesting for the last 7 years. It has split multiple times and I have sold and donated a portion of the original purchase. I have never touched the reinvested shares. I accumulated all the purchase prices. What do you report the purchase dates and can you report them all as long term gains. How do you report the last year stocks?

Can you lump all the dividend purchases as one. And the last 4 in the past year as short term. I am talking about 30+ dividend reinvestments. I bought them direct and have all the statements so no broker.

Answer 1

Group your purchases into long-term and short-term. For the long-term, use the most recent purchase date that is long-term. For the short-term, use "various" as the purchase date. This will accurately reflect your long-term and short-term gains.

Answer 2

First off, I am not a tax professional, so I might be wrong.

I believe that when a stock splits, you still use the original purchase date - so if you bought 100 shares of company XYZ for $1 each (total cost basis: $100) on March 27, 1965, and it split 5 times, you would now own 3200 shares purchased on March 27, 1965 (with a cost basis of $100).

As for the reinvestments, those are actually purchases, so each would have its own purchase date. For tax purposes, you may wish to list each sale seperately, to ensure you get long term gains where possible (anything owned more than a year, I think).

Bottom line, though - talk with a tax guy. You don't want to screw up based on an answer you got here, and have the IRS find you. They're a scary bunch.

Answer 3

get with your brokerage company (if you have one) and they will be provide you a cost basis statement for your stocks (for a fee of course). it will help you make the tax reporting. if you do not have one, you have to get all your transaction statements and figure all the cost basis for your stocks. if confused, a tax prep company can help you.

Answer 4

If you have all the data, enter it in Quicken, and let quicken figure it out.