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A friend of mine received some stock as inheritance when his grandmother passed away several years ago. It was given to him in the form of a single stock certificate document.

Since that time the stock has split on two different occasions. Now he has three certificates; 1) the original, 2) after the initial split showing double the #1 amount, and 3) the last one which show double the #2 amount.

My friend wants to sell some of the stock and has contacted the issuing bank in which to convert the certificates to electronic form/book entry form.


1) how to calculate the cost basis? These would be long term capital gains for sure. But how does the government treat inheritance of stock and the cost basis?

2) Is there a FIFO or FILO method or combination thereof that should be considered when selling only a portion of the total shares owned in terms of calculating cost basis and therefore capital gains?
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