The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Dividend Reinvestment - A Tax Nightmare?||Date: 7/6/2008 5:47 PM|
|Author: Opv1419||Number: 101270 of 122320|
Could someone please explain why DRiPs are such a tax nightmare? Can't I just keep a "cost-average" and then use that number to determine my gain or loss when I buy or sell?
Some consider it a nighmare because each DRIP event has to be tracked individually for tax reporting purposes, as each dividend reinvestment is an individual stock purchase. Thus, each purchase has it's own per-share purchase price that has to be tracked for purposes of calculating capital gains on each individual purchase.
At least that is the way I understand it. Those more Foolish than I might have other, more enlightening thoughts.
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