Has anyone sold a stock held via a DRiP lately? I'm wondering how painful the tax implications were.I mostly buy/sell individual stocks in IRAs but I do have several drips going. Entering an individual stock sale in TurboTax is pretty painless. Just wondering how people have fared doing so with something they bought monthly for years and years.Thanks
The only problem you run into is that some of the capital gains canbe short-term. The long-term gains are merely bought over a "various"time frame. You have to hold onto the documentation to maintain thecost basis.If you sell a portion of your holdings, you have to select if you areselling specific shares - i.e. are you averaging the costs or sellingthe last shares bought - or the first shares bought. Once you choosethe approach, you do have to stick with it as I understand. Taxaccountants may need to chime in for this part of the discussion.Howie52Life is simple.Tax accounting is hard.Interpreting the capital gains form instructions in the IRS documentsis a major cause for alcoholism.
haha good answer, do you think we will all (including the government) be better off if their was no capital gain tax.
"do you think we will all (including the government) be better off if their was no capital gain tax."*******************************************I can't really comment about tax policy - but Ican say that we would all be better off if thepeople who write the IRS procedures were trained to use straight-forward language. Every time I try to follow the IRS capital gainsform instructions I end up having to read andre-read and re-read - and then try to do the declarations and calculations on a side-sheet of paper once or twice to see if what I understand ofthe intent matches the results.Howie52The IRS forms are a nightmare.
Shalom Howie, How exactly do you do the cost averaging you mention? I have a holding of XOM in a brokerage account which was put in there after many years of DRIPing. I also have a holding owned directly which has been DRIPing all along for even more years. To complicate matters, as I recall many years ago I sold some when all was owned directly and DRIPing. I would love to sell some to generate some cash, preferably from brokerage account, but if is easier to account for things in the direct account that would be ok. The accounting seems totally daunting if I have to report many tens of quarterly DRIP purchases. If there is someway, via averaging to globally account for the gains, that would be a godsend for me. Of course, input from any tax professionals or tax wise Fools would be more than welcome. Thanks in advance, -Menachem <email@example.com>
"How exactly do you do the cost averaging "************************************************You add the direct purchase dollars plus dividend dollars reinvested anddivide by the total number of shares purchased and accumulated via reinvestment.A simple average cost of your shares.You do have other options - but that would be the simplest approach.You also can select to use a first-in, first out or a first-in last-out or other approach to selling specific shares - then retain the documentation showing the cost basis for the specific shares. My positions are generallynot sufficiently major to make much difference - so the average cost basisworks well for me.Howie52May fortune smile upon you in the sale.
One other thing - you can deduct the cost of transactions - but need to add in the costsof fees paid by the company for transactions - i.e. the reinvestment fees charged by some outfits are paid by the company or paid out of the dividend. These tend to be rather lowfor most DRIP accounts - but pennies here or there over a long period can become aninteresting figure. XOM had their own internal company DRIP program as I recall and did not charge fees.Computershare and others do charge fees - and sometimes you have to pay them - othertimes the company you are investing in pays them. Generally these are $0.01 to $0.06per transaction - so if you are looking at under a hundred shares total position, thecosts are less than IRS requires you to figure.Howie52Details form a forgetful individual makes for multiple postings.
Howie,M1Finance dot com (FREE) can save you hours of tax reporting at the end of the year. M1Finance takes care of everything.All you do is create Slices within a Pie. Automatic re-investing and or add monies on a schedule you prefer.I own 3 Pies and one of them is Set it and forget it within the RothIRA Pie. Each Pie is fed 250.00 on the first business day of the month. Like paying a car payment. Something to ponder.Quillnpenn - a poor church mouse scratching for a living as a Swing Trader.
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