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I have a stock, DWDP, that spun off some shares of DOW, so now I own that as well. This just happened. I want to sell my DOW shares, and I'm curious if that will be considered long term or short term. The DWDP is long term. I didn't buy DOW, but acquired it from a rearranging of DWDP.

Thanks,

Lisa
in MA
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I have a stock, DWDP, that spun off some shares of DOW, so now I own that as well. This just happened. I want to sell my DOW shares, and I'm curious if that will be considered long term or short term. The DWDP is long term. I didn't buy DOW, but acquired it from a rearranging of DWDP.

According to the FAQs on the Dow website https://s23.q4cdn.com/981382065/files/doc_downloads/spinoff_... the spin-off is expected to be a tax-free transaction. This means that the acquisition date of the Dow shares will be the same as the acquisition date of the DWDP shares - so your sale should be long-term. (Note - if you acquired DWDP shares on different dates, you will have to allocate the dates to the Dow shares proportionally.)

Be aware, you will also need to figure out the allocation of your cost basis between the 2 stocks to properly calculate any gains/losses.

AJ
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thanks, AJ, for the info and the link!

Lisa
in MA
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The split this time was 75% DWDP/25% Dow based on current market value. Presumably the cost basis will split the same way. But its even more complicated because most of us got DWDP shares from the merger of the old Dow and Dupont and for anti trust clearance major chunks of the companies were sold off. Most of Dupont's pesticides business went to FMC, which now is an ag company, having spun off Lithium Corporation of America as Livent.

DWDP now plans to spin off Dupont and keep its ag seeds business competing with Bayer-Monsanto under the new name Corteva Agriscience. This spinoff is expected June 1.

Fortunately now days your broker is supposed to keep track of all of this. (CAPs seems to be struggling but has calculated major dividend payments and deducted same from your cost basis.)
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Fortunately now days your broker is supposed to keep track of all of this. (CAPs seems to be struggling but has calculated major dividend payments and deducted same from your cost basis.)

Even though they are supposed to track cost basis changes, there are exceptions to the requirement, and brokers do make mistakes. It is YOUR responsibility to maintain accurate records. Additionally, as you mentioned, Dow has a long history of corporate reorganizations many of which pre-date the requirement for broker cost basis tracking. Keeping accurate records here is only "somewhat" easier than tracking the AT&T breakup of the 1980s.

Ira
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I hear you saying we can count on the IRS to know the right answer and to advise us if we get it wrong.

Your best guess might be better than theirs.
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