If TP receives nondividend distributions, publication 550 says,
If you buy stock in corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first.
If TP keeps track of the lots individually, does this count as identifying the shares? In this case, is it acceptable to divide the "1099-DIV box 3" amount among the lots proportionally?
Assuming the dividend came from a publicly traded entity, you divide the amount by the number of shares you owned on the distribution date to determine the basis adjustment for each share.
Ira Smilovitz
If one has only the yearly 1099-DIV form, is it acceptable to use "box
3" as the amount, and the December 31 share holdings for the calculation? (For some years, shares are bought or sold during the year.)
You can do anything you want, but that doesn't make it correct. The correct procedure is to look at each dividend distribution that generated a non-dividend distribution and divide each non-dividend distribution by the number of shares which you owned on the ex-dividend date for that distribution. All of this information should be readily available from the internet and your personal records.
Ira Smilovitz
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