How do I find a stock's cost basis? (2024)

FAQs

How do I find a stock's cost basis? ›

Take the original investment amount ($10,000) and divide it by the new number of shares you hold (2,000 shares) to arrive at the new per-share cost basis ($10,000/2,000 = $5). Take your previous cost basis per share ($10) and divide it by the split factor of 2:1 ($10.00/2 = $5).

Go online for historical stock prices

For example, view the historical section at Marketwatch or Nasdaq. It's generally acceptable to take the lowest and highest price from a given day and average them to arrive at a cost. It's also acceptable to use the closing price on the day of purchase.

The IRS expects taxpayers to keep the original documentation for capital assets, such as real estate and investments. It uses these documents, along with third-party records, bank statements and published market data, to verify the cost basis of assets.

In our example, one share of Company A stock was entitled to 1.049 shares of Company B stock, so 98.7049 divided by 1.049 is equal to 94.094 shares of Company A stock. Multiply the result from the previous step by your original cost basis per share, to get the cost basis for the stock portion of the merger.

In terms of taxes, the cost basis of inherited stock is the value at the time of the original owner's death, not the value when the stock was originally purchased. The person inheriting the stock only owes taxes on the change in stock price between when it was inherited and when it was sold.

For stocks and bonds, the cost basis is generally your purchase price for the securities, including reinvested dividends or reinvested capital gains distributions, plus additional costs such as the commission or other fees you paid to complete the transaction.

The cost basis of stock you received as a gift ("gifted stock") is determined by the giver's original cost basis and the fair market value (FMV) of the stock at the time you received the gift. If the FMV when you received the gift was more than the original cost basis, use the original cost basis when you sell.

In this case, you should refer to the original brokerage statement detailing the purchase of that security or contact your former broker to determine the Date Acquired and Cost Basis (what you paid for the security) and enter it manually into your tax preparation software or onto your Form 8949.

Individual taxpayers are responsible for tracking the cost basis of their noncovered investments and for calculating and reporting the holding period and any realized gain or loss on the sale of those investments.

The easiest way to track and calculate cost basis is through brokerage firms. Whether an investor has an online or traditional brokerage account, firms have very sophisticated systems that maintain records of transactions and corporate actions related to stocks.

What is the best cost basis method? ›

First-in, first-out method (FIFO)

This is the default for all investments other than mutual funds. Method implications: Because asset prices tend to rise over time, using FIFO as your cost basis method will have the oldest shares sold first, and those shares will often have the lowest cost basis.

You can calculate your cost basis per share in two ways: Take the original investment amount ($10,000) and divide it by the new number of shares you hold (2,000 shares) to arrive at the new per-share cost basis ($10,000 ÷ 2,000 = $5.00).

RoC typically is not taxed in the current year. Instead, it reduces a shareholder's cost basis in the fund. When the shareholder sells his or her fund shares, any gains will consider the selling price relative to the reduced cost basis. This means that RoC may defer some of the shareholder's tax liability.

Asset acquired by deceased before 20 September 1985

You are taken to have acquired a single asset. The cost base of this single asset is the total of: the cost base of the major improvement on the day the person died. the market value of the pre-CGT asset, excluding the improvement, on the day the deceased died.

A step-up in basis resets the cost basis of an inherited asset to its market value on the decedent's date of death. If the asset is later sold, the higher new cost basis would be subtracted from the sale price to calculate the capital gains tax liability, if any.

When you're inheriting either cash or stocks, one isn't better or worse than the other. Each offers benefits. Having money in hand upon a family member's death means the ability to use it immediately for any purpose. However, there's also the risk of quickly running out of the entire inheritance.

How can we help? The Form 1099-B that you receive might only report the sale date and sales proceeds. If it does not report the date acquired or cost basis, you still need to enter that information when you report your Form 1099-B in the TaxAct program so that it will transfer to Schedule D and/or Form 8949.

When the basis for an asset is not established at the time of sale, it means that there is no documented record of the original cost or value of the asset. In such a scenario, the IRS typically assumes a basis of $0. This implies that the entire amount received from the sale is considered as gain, subject to taxation.

A noncovered security is an SEC designation indicating that a broker does not have to report the cost basis of that security to the IRS. This is generally for smaller securities. Securities created from noncovered securities, such as stock splits or DRIP accounts, remain noncovered.