Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
.My difficulty is, throughout all the years I had my dividend reinvested, how do I determine if I gained or lossed? And by what percent?

I've got bad news for you. You're thinking about the stock as if it were only one purchase. It's not. Each time you reinvested your dividend you made another purchase of stock. Each of those individual purchases has a price, and the difference between that purchase cost and your sale price is the gain, and the gain is what's taxable.

You have three choices:

1. Claim zero cost basis for the reinvested dividend. This means that your cost basis will be the basis of the person who gave it to you. (Gifts are the givers basis; inheritance is the basis at the time of inheritance.). You will pay more taxes than you owe, but this will save you a lot of time and effort. If your total stock sale was less than $5000 I would say just use this method unless you really really need the cash.

2. Hire someone to figure out what your cost basis in the stock you sold is. This may very well cost more than option #1.

3. Do it yourself. Start a spreadsheet. Include the number of shares you got and the cost basis you got with them. Now look up the history of GM dividends. Make a line for each dividend, with the stock price on the buy date. Each line is a separate purchase. Don't forget that each time a dividend was given you owned a little bit more stock, so you need to keep track of the total number of shares as well as the individual purchases. When you've entered all 25 years of transactions, the total number of shares should be the same as the total number of shares you sold. Now you compare the cost of each individual purchase with what it sold for. That's your gain or loss for each share. Each of these transactions is a separate entry on your Schedule D. (There are also ways to do this directly in tax preparation software.)

If you're very very lucky you'll find someone who has already collected all of this information for GM and then you'll just have to enter your own stock amounts.

Did you ever add more money into the stock? Did you ever take some of the dividend as cash instead of stock? If you don't know the answers to those questions, just go with option #1. On the other hand if you have all of the paperwork GM ever sent you then this will be a few days work on a spreadsheet and option #3 is reasonable.

Good luck, you're going to need it!

- Megan
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.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.