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Financial Planning / Tax Strategies
|Subject: Re: Stock split||Date: 1/18/1999 10:40 PM|
|Author: gapfan||Number: 8559 of 121455|
<<<<I've held some stocks for awhile and they have split. I am thinking of selling half of them, but not sure how to figure what capital gains base price I would use. I had 100 and now have 200. Lets just say I paid 25 a share. Would I use half of this amout or take all the original price off the first 100 sold, making the 100 left, 100% capital gains at their time of sale at a later date? And after doing this what would I do if these should split again after doing this??>>>>
You will get an official answer later but I offer that answer and a suggestion which was very profitable for me. First the cost basis: Original cost divided by the shares at the time = cost per share. In your example, you started at $25/share. A split gave 2 shares for 1, thus $25/2shares = $12.50/split share. Repeat the process as necessary. When you sell you figure the cost basis of the specific shares you sell and the transaction is based on those shares only.
My suggestion is that if the stock is a winner, you sell only part of it. If it continues to grow, you may sell more later, but do not sell all of it. I started with Gap, Inc. in '80, sold bits along the way, but one of the original shares is now 108 split shares, and still growing. My cost basis would be the original cost per share/108.
Had I thought 100% or 200% gain was enough and sold it all then, who knows. I know I was very lucky by NOT selling it all just because there was a good profit, that is not "investing." I suggest keeping at least part of your winners.
Good luck, Gapfan :-)
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