1

For tax. 1099-b form. Need to fill in 8949 form. Have a history of dividends reinvestments for almost 20 years. In the end of 2015 sold part of the stocks. How can I integrate the dividends reinvestment into basis/cost of form 1099-b which for now has just number of stocks sold, their price and proceeds.

Thank you

  • Does your brokerage allow for selecting lots for tax purposes? – Stephen Grimes Mar 21 '16 at 4:34
  • Every (US) broker I've dealt with since before 2000 recorded basis long before they were required to report it on 1099B. Mine always sent a package containing the 1099B's plus another form labelled something like "additional information not reported on 1099B that may assist you in doing taxes". Did you get such? If not, ask them if they can provide it, or if you have online (web) access, look for 'realized gain/loss' or similar. @StephenGrimes Designated lots, or average basis if available, must be selected before or at time of sale; now is too late. – dave_thompson_085 Mar 21 '16 at 19:24
1

The cost basis is the total cost that you put into the stock, so don't get too wrapped up in exactly which purchase lot is which. Figure out your initial investment and the total of dividends that were re-invested over time. That's your total basis.

You said that you sold part of the stocks, so do what I wrote above, but allocate the basis up to the number of shares that you sold. The rest of your cost goes to the basis on what you're still holding toward a future sale.

In your case this last part probably doesn't matter, but you would at some point need to allocate long versus short term gains. That means that the last few buys are probably short-term and that part of the basis should be totaled separately. Since you're still holding some of the stock though, it seems like you probably won't need to worry about this. (The most recent buys you should probably allocated to what you're still holding so that it has a chance to get to long-term status.)

  • Average basis is easy (and IME default) for mutual funds, but for individual securities and especially 'noncovered' (pre-2011) ones I'm not sure it's available; pub550 is rather confusing. But now that basis reporting is in effect, all brokers I've dealt with require selecting it at or before the time of sale. If OP didn't select, FIFO is the default, which automatically retains the newest lots. – dave_thompson_085 Mar 21 '16 at 19:28

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.