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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: Re: stupid question about figuring basis Date: 2/27/2009 4:39 PM
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Please tell me that the reinvested "additionally purchased shares" via those reinv. divs don't count insofar as figuring new "trade dates" for those particular fractions.

Sorry, but, that is the case. Each reinvested dividend is a separate purchase. The message is -- keep good records.
At the time of a sale of a portion of the holding you will need to identify and understand which shares are being sold. If you are following FIFO the first shares bought are the first shares sold. You can also choose to select which shares are being sold if your broker will accommodate it. When completing your 1040 Schedule D you will need to separate long term from short term sales and their associated purchases. The purchses can be lumped together with a "var" (various) purchase date. Your cost basis will be the sum of all of the purchases plus the dividends plus any commissions. The amount received will be the sale proceeds less any commissions from the sale. The difference will be the capital gain or loss.

Bob
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