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We've had some stock in one company since the early 1990s. We had the dividends reinvested in the stock each time they were paid, so the records show we bought fractional shares from time to time over the years.

Recently we sold a chunk of that stock, so I'm trying to figure out the cost basis for taxes. The broker listed the date each share or fraction was acquired, but no corresponding purchase price.

I've pulled down daily historical records for this stock, but those show the opening, high, low, and adjusted close figures for each day. Since I don't know when during the day the stocks were purchased, can I use the daily average between the high and low (or adjusted close, if it's higher or lower than either of those figures)? I no longer have individual records of those incremental purchases.

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  • Do you know/can you look up the divident amount (per share)?
    – Solarflare
    Feb 19, 2022 at 1:41
  • The brokerage firm did give me the dividend figures, but I'm afraid it doesn't help me with my basic question, which is: since the historical prices are shown for high and low, and opening and closing prices for each date, and I do not know what time of day the shares were purchased, do you think I should be able to take an AVERAGE of the high and low prices for each day, in order to create a cost basis for that day? For example, on Jun 19, 1996 the stock had a high of $13.97 and a low of $7.52 per share. Do I take the high, the low, or can I average the price throughout the day ($10.74)?
    – Bytewench
    Feb 21, 2022 at 0:23
  • My idea was (and Dereks answer suggests it too): if in the year 1996, you owned 1000 shares, and the dividend payout per share was 1$ (or maybe you have the total dividend amount) - which was unclear if you know this number, but apparently you do - and your data sheet shows that in 1996, you bought 100 new shares by auto-reinvesting the 1000$ dividend, you know that the price was 10$ per share. (At least as far as it sounds in your question, those numbers are given?)
    – Solarflare
    Feb 21, 2022 at 1:09

1 Answer 1

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The amount you paid for fractional shares is the amount you received in dividends on that date.

You can calculate your dividend by taking your share balance on the ex-dividend date and multiplying by the payout amount.

Finally, you can do a sanity check on this amount by dividing the dividend by the fractional shares bought, and see if it falls in the high-low range of the stock on the payout date.

Iterate this across your stock history, and you can calculate a cost basis and hence gains for all of the fractional shares. This sounds complicated, however using tools like excel would make the task somewhat trivial. Or you can hire a tax accountant and have them perform the calculations for you.

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  • Interesting, but my question is: since the historical prices are shown for opening and closing prices for each date, and I do not know what time of day the shares were purchased, do you think I should be able to take an AVERAGE of the opening and closing prices for each day, in order to create a cost basis for that day? For example, on Jun 19, 1996 the stock had a high of $13.97 and a low of $7.52 per share. Do I take the high, the low, or can I average the price throughout the day ($10.74)?
    – Bytewench
    Feb 21, 2022 at 0:20
  • Rather than guessing, I'd suggest trying a few of the calculations described above, and see how the numbers come out. If you find that the calculated purchase price consistently matches the closing price, for example, then you'd probably be safe assuming the close price for all remaining transactions. This way, also, if you were ever audited you could point to calculations as your rationale, rather than risking the accusation that you "cherry picked data to minimize tax", or etc. Feb 21, 2022 at 1:03

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