Schedule D and Cost-Basis help

Cost-basis calculations are one of the most vexing issues facing any tax preparer. When you add in the complexities resulting from stock splits, acquisitions, etc., many reach their wits' end. First, congratulations for having kept accurate records of all transactions, so you will eventually be able to properly report your cost basis -- when you sell this holding. Second, the precise reporting of your ".2 share" is simply not worth your time to calculate. The actual proceeds -- $6

-- will quite probably make no difference in your tax due; so my recommendation would be to simply report that as a Part II, line 8 - long term gain, titled: "Disney partial share" Date acquired: Various Date sold: actual date of income receipt/check Proceeds: $6 (that's all you got, right?) Cost: $1 (Rounding, without meticulous calculations - simply not worth it. Subtract that $1 from your total cost basis for the net 55 shares you actually retain.) Gain: $5. Just math.

Keep on maintaining your records as meticulously as you have, and your eventual sale of this asset will have an easy cost-basis calculation. One suggestion: Sell it all in one lump. It's not worth the reporting aggro to break up such small holdings. Bill

I dunno! A $5.61 sale to calculate the gain on? If you value your time claim zero cost. On the other hand, I wonder if the IRS gets info on sales at that low value. Al Levesque

If shares are converted because of a merger or acquisition or spin-off or split, the acquisition date is still the date you bought the shares originally. Basically, the shares may be renamed and renumbered, but they're the same old shares for tax purposes. So in your case, "long term" applies.

A. .2 sh Dis B. 10/22/04 C. 6/1/06 D. $ 5.61 E. $ 3,73 F. $ 1.88

ed

My original post got cut of its text leaving only the numbers in my post above.. Your cost is (958.32) + 9.95 commission + $1 confirm fee$969.27 + $30 + $30 = $1,029.27 and it eventually got you

55.2 shares of Disney. that's $18,646 per share making your .2 shares have a cost basis of $3.73. Since you got $5,53 for them your profit is $1,88. It is long term becasue you originaly bought the shares over a year ago. Eveything else is ignorable. ed

It's either .2 shares Disney or .087 shares Pixar. Did they issue a 1099-B? If so, I'd use the company specified on the

1099-B, otherwise I don't think it will matter.

If this was a tax-free conversion, your acquisition date of the Disney stock is considered to be the original acquisition date of the Pixar stock, i.e. 10/22/04. So it's a long-term gain.

Correct.

There's no Sales price on Schedule D, there's the Gross Proceeds, which is $5.61.

Your original cost basis was $969.27 for 24 shares (the fees for getting certificates isn't part of the cost basis), or $40.39/share. The cash is due to .087 shares, so the cost basis was $3.51.

$2.20 gain.

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

*** PLEASE don't copy me on replies, I'll read them in the group ***

Your gain is long term.

10/22/2004

Sales price for .2 shares, according to your data, is $5.61

I compute a basis per share for the Disney stock of $18.646. That makes the basis of .2 shares be $3.73.

$5.61 - 3.73 = $1.88 Long term capital gain