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Author: yakers Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27818  
Subject: DRIP Tax Accounting Date: 8/6/2004 7:08 PM
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Is there a tutorial in Quicken or Turbotax or somewhere else on the web that explains how to calculate the taxes on closing out a DRIP? I know I have heard the term “cost basis” but I am not sure if that means I have to calculate every stock purchase.
I expect to keep things easy by selling all my shares in one DRIP at one time. So for example, I make monthly DRIP purchases at $100 for 6 years. So I would have 72 monthly purchases and 24 quarterly purchases = 96 purchases. Now obviously some of these were held for over 5 years, some 1to 5 years and some less than one year so I assume there would be 3 different capital gains tax rates? And there was a split a couple years back; I'm not sure what to do with that. So six years ago I bought $100 worth of stock @$40 a share (2.5 shares), it is now $45 a share after a 2 for 1 split 2 years ago. I assume that the real value of my first buy would now be $90 a share for a capital gains of $95-$40= $55 X 2.5 shares = $137.50 X 18% tax rate.. I suppose my initial $25 DRIP set up fee would reduce the first transaction and only minor costs I think 5 cents a share is charged as a sales cost by the company.
And I would need to do this calculation 96 times? It does sound complicated to a non accountant like me although its just a lot of arithmetic. Is there an easier way to do this? I have 6 DRIPS and expect to keep some 10 years or more but that is a lot of calculations. Am I missing something?
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