Message Font: Serif | Sans-Serif
No. of Recommendations: 2
However, I have several questions about determining the cost basis:

(a) Can I assume a zero cost basis since the ESOP provided the original 59 shares at no cost to me?

Was any of their value reported on your W-2?

The IRS will not question a zero cost basis.

(b) Or, in calculating the cost basis, must I account for stock purchases from dividends paid in the DRIP? The company’s dividends are qualified dividends. If yes, do subsequent stock splits in the DRIP account affect the calculation of the cost basis?

Reinvested dividends increase your cost basis. Including them has the potential to reduce your taxes. If the gross sale is within the 0% bracket for capital gains, there isn't going to be any actual tax savings.

Stock splits for those shares purchased with dividends change your cost basis. If your cost basis for the original shares is zero, splits would have no effect on their cost basis.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.