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I am not sure how to handle the basis calculation on a recent distribution from a stock that I have held for several years. The company issued tax free new shares to current shareholders(an additional 5% for shares currently held). Is this just another version of a stock split? Would I handle the basis calculation the same way?
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<< I am not sure how to handle the basis calculation on a recent distribution from a stock that I have held for several years. The company issued tax free new shares to current shareholders(an additional 5% for shares currently held). Is this just another version of a stock split? Would I handle the basis calculation the same way? >>

It's a stock dividend. You handle the basis calculation the same way as you would for a split.

Phil Marti
Tax Preparer
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The basis remains the same if you sell all of them, the capital gain will be selling price minus original cost. However, the adjusted cost per share is now 100 divided
by 105, times the original cost per share. So if you
sell part of your holding, you would multiply this
adjusted basis per share by the number of shares sold to get the cost for tax purposes. Be sure to keep a note of the adjusted basis per share in your records as
you will need it every you sell, until all of the stock is sold. Have a great 2000 - - Matthew
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Yes, it's like a stock split, handled in the same way.
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