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I'm new to investing ... trying to finish my taxes using TurboTax... and I'm stumped ... so here goes ...

In 2002, I bought 30 shares of PayPal which soon became 11.7 shares
(formula: 1 PayPal share = .39 eBay share) and I received my first ever 1099-B showing $39.73 under the heading "Stocks Gross Proceeds Less Commissions...". Also, my brokerage statement showed the exchange of shares along with a "Mandatory Reorg Fee" of $20.

1) I assume the $39.73 was from the sale of the fractional share (.7)of stock, correct?


Yes.

2) For the "Net Sales Price", do I enter $39.73 or should I first deduct the $20 "Mandatory Reorg Fee" and then enter the result as the "Net Sales Price"?

No. Add the $20 to the cost you paid for the original 30 shares of Paypal and continue to question 3.

3) For the "Cost Basis", do I enter the $600 that I paid for the 30 shares of PayPal? {Note: When this data is entered into TurboTax, the sale is summarized as a ($563.27) "loss". This can't be right and I must be doing something wrong.

Correct, you are doing something wrong. What you need to do is take the adjusted cost of your 30 Paypal shares (original cost + $20 reorg. fee) and divide that by 11.7. This gives you the cost basis for one share of eBay. Multiply this cost basis by 0.7 and you will have the cost basis for the fractional share you sold. The difference between this cost and the $39.73 you received will be your taxable capital gain or loss.

Can anybody help me before 4/15/03?!

I think I just did.

Ira
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