The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Stock cost basis for ESOP & DRIP||Date: 10/25/2012 4:59 PM|
|Author: vkg||Number: 116841 of 120428|
However, I have several questions about determining the cost basis:
(a) Can I assume a zero cost basis since the ESOP provided the original 59 shares at no cost to me?
Was any of their value reported on your W-2?
The IRS will not question a zero cost basis.
(b) Or, in calculating the cost basis, must I account for stock purchases from dividends paid in the DRIP? The company’s dividends are qualified dividends. If yes, do subsequent stock splits in the DRIP account affect the calculation of the cost basis?
Reinvested dividends increase your cost basis. Including them has the potential to reduce your taxes. If the gross sale is within the 0% bracket for capital gains, there isn't going to be any actual tax savings.
Stock splits for those shares purchased with dividends change your cost basis. If your cost basis for the original shares is zero, splits would have no effect on their cost basis.
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