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Financial Planning / Tax Strategies
|Subject: Re: Tax Question on Fractional Shares||Date: 2/3/2008 1:05 PM|
|Author: quitman100||Number: 98256 of 122111|
Ok, here is a little more information and what I think I should report for taxes.
The $23.15 was for 0.809 shares of Spectra which would imply a per share price of 28.62 (which looks about right given what Spectra closed at in January).
I first purchased a $500 block of Duke shares on March 31, 2005 (17.8169 shares for $28.0632 per share).
So using the 58.11 and 41.89 % figures recommended by Duke, the basis for that block would be:
$290.55 New Duke Energy Tax Basis
$209.45 Spectra Energy Tax Basis
The spinoff distribution was 0.5 meaning the 17.8169 shares would generate 8.90845 shares of Spectra. So, the Spectra Energy Tax Basis (per share) would be:
Since I received a check for 0.809 shares, the fractional share basis would be $23.51*0.809 or $19.02.
So, in sum, I would report to the IRS:
Date acquired: March 31, 2005
Cost Basis: $19.02
Date sold: January 2, 2008
Sale Proceeds: $23.15
Capital gain would be $4.13
Does this seem like the right approach?
More important, I still hold Duke and Spectra stock (I do Drip the Duke stock). Will this calculation (which is first in first out) lock me into a particular method for determining the basis when I eventually sell my Duke and Spectra stock in the future (i.e., will the IRS say that since I used the first in first out method, I have to use that when I sell my main holdings later?)
Thanks for all the help!
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