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True as far as it goes. Once you've had the taxable income, though, that becomes your basis in the stock which you now hold, just the same as if you'd bought it from a broker. I would argue that it's the gross amount of the "bonus," not the net that constitutes your basis.

I don't understand this logic - it seems to imply to me that the federal and state taxes I paid on the distribution are no different than broker commissions.

In other words, let's say I take my entire two-week paycheck and buy a bunch of stock with it. Isn't my cost basis determined by the cash value of that transaction? Surely I don't include my paycheck deductions into account!

I don't understand how the second situation differs from the first, but I know there must be something I'm missing, as you always give solid accurate advice. Please help me understand.


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