# Donee's Cost basis when gifting securities to an individual

I understand the cost basis to the recipient is the lower of donor's cost basis or FMV at time of gift.
My securities are enrolled in DRIP which means a stock position of 512 shares could consists of numerous lots. Does the lower of cost or FMV applies for each lot in that security? Or does it apply to the 512 sh. in total ?
TIA
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
On 7/17/19 7:31 AM, Not A Clue wrote:

You can not average the cost of stock. Every time you reinvest a dividend, the stock purchased with that dividend has its own cost basis. E.g., if XYZ paid a quarterly dividend of \$270 on 3/15/19 and the number of shares purchased was 4.5, then each of those whole 3/15/19 XYZ shares have a cost basis of \$60.00. The fractional share has a cost basis of \$30.00.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
On Fri, 19 Jul 2019 15:42:00 EDT, Alan wrote:

I read that paragraph and thought, "that can't be right. Vanguard's default computation method for basis is the average."(*) Then I read again what you wrote: "... the cost of STOCK." With Vanguard I'm talking about mutual finds, which contain a basket of stocks or bonds or both. So it would seem that the rules are different, and less stringent, for mutual funds than they are when you invest in individual stocks.
(*) https://investor.vanguard.com/taxes/cost-basis/methods
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://BrownMath.com/
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
On 7/19/19 9:22 PM, Stan Brown wrote:

Yes, the use of the average cost method for basis exists for mutual funds. You can use any of the available cost basis methods for a mutual fund. E.g., you can use average cost for one mutual fund and FIFO for another fund.
I haven't check the rules lately, but I believe once the average method is selected for a mutual fund, you are stuck with it for that fund.
I haven't checked all mutual fund companies and all brokers, but I think it is safe to say that the default method for mutual funds is average cost.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
On Sat, 20 Jul 2019 15:39:37 EDT, Alan wrote:

Only for past purchases, not for future ones in the same fund. and possibly not even for past purchases -- note "may" in the footnote. However, the "must" in the next sentence seems to contradict "may". The same Web page says:
"Even if you've already selected?and even used?one of these cost basis calculation methods, you can change it for future sales whenever you want.* And you can apply those changes to just one fund or to all the funds within an account. ...
"*If average cost was previously used, the shares that you acquired before the method change MAY be locked with the average basis. By law, to revoke the average basis, you MUST change your cost basis method before the first sale, transfer, or disposition. [emphasis added]"
(I know Vanguard is not the IRS, but they're big enough that I think we can trust they've got the tax rules correct.)
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://BrownMath.com/
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>

## Site Timeline

• Share To

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.