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Author: Norm18 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Finding Cost Bais Date: 5/18/2001 10:59 AM
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Greetings Tax Experts--

I have been trying to establish a cost basis on some ADS's I purchased thru two different offerings from the company I once worked for. After some searching I have the numbers but am unsure as to how to calculate the "cost basis" for tax purposes. Can you folks help me?

The history is as follows:

Bought 50 @ $31 in '92
Bought 100 @ $32 in '94
Reinvested dividends on 7 occasions at prices from $38 to $90
Received 50 "bonus" shares @ $40 in '97 as a part of the '92 offer.

Had a total of 210 shares in 9/2000 which were exchanged on a 4 for 3 basis for TOT ADS's when Elf was acquired by Total Fina so I now hold 280 TOT ADS's.

I now need help in calculating the cost basis.

thanks in advance.
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 51083 of 121061
Subject: Re: Finding Cost Bais Date: 5/19/2001 2:53 AM
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Bought 50 @ $31 in '92
Bought 100 @ $32 in '94
Reinvested dividends on 7 occasions at prices from $38 to $90


All these are straightforward purchases. Your basis for each block of shares is what you paid for those shares. Remember that there's no cost averaging with stocks.

Received 50 "bonus" shares @ $40 in '97 as a part of the '92 offer.

I can't figure out what you paid for them, but that's the basis for these shares. If you didn't pay anything for them and their value was considered compensation, that's your basis, because you paid tax on the wage income. Likewise if you paid tax on the difference between what you paid for them and what they were worth.

Example: Purchase 50 shares worth $60 @ $40: $2,000
Deemed wages: $1,000
Total basis: $3,000

Had a total of 210 shares in 9/2000 which were exchanged on a 4 for 3 basis for TOT ADS's when Elf was acquired by Total Fina so I now hold 280 TOT ADS's.

The merger paperwork tells you the tax treatment of this exchange. If it was a standard tax-free exchange, you allocate your basis of the old shares proportionately to the new shares.

Details about basis calculations are in IRS Publication 551.

Phil Marti
VITA Volunteer

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