Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next
Author: edmus Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121315  
Subject: Confusing fractional shares question Date: 2/13/2000 11:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I've already read the Fool's articles on handling
fractional shares, but I'm not sure any of them apply
directly to my situation.

I bought 140 shares of Intel through Schwab a few
years ago and selected the dividend reinvestment
option (sure wish I hadn't now!). I paid $70 per
share.

Every 3 months, Intel issues a tiny cash dividend.
Schwab reinvests this cash in fractional shares
of Intel (usually on the order of 0.04) at the current
share price. Before the '99 stock split, I had
accumulated 0.37 fractional shares, giving me
a total of 140.37 shares.

When the stock split occurred, I ended up with
280.37 shares, and cash in lieu of 0.37 shares
in the amount of $22.

How do I calculate my cost basis for the 0.37 shares
that I received cash for? Do I
A) Calculate using the FIFO method -- what I paid
for the initial 140 shares -- 0.37*$70/2.
B) Take the average cost of the initial 280 (split-adj)
shares and the 0.37 shares sold.
C) Take the average cost of all 280.74 shares,
including the prices of the numerous dividend
reinvestments.
D) None of the above!

Any help is greatly appreciated.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Netflix Riles Investors
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement