Cost Basis - Home

for all your cost basis questions

What is cost basis? It is the term used for the tax cost of an asset. It usually starts out as the purchase price (plus commissions and fees) but "stuff" happens that can cause your basis to change. Things called corporate actions can occur such as stock spinoffs, mergers, splits, split-offs, rights, or return of capital, all of which affect your cost basis. These are also called corporate reorg (reorganization) actions. Did you know that class action claim checks and even a corporate headquarters move (change of domicile) can affect your cost basis?

Totally confused? Keep reading and we will help you out.

Some recent additions to our calculators:

Spinoff Calculator:

Baxalta

Care Capital Properties

CareTrust REIT

Covetrus

Halyard Health

New Senior

NorthStar Asset Mgmt

Paypal Holdings

Rayonier Adv Matls

Resideo

Remy International

Seventy Seven Energy

South32

Talen Energy

Tegna (Gannett)

Theravance BioPharma

Veritiv

Viatris

Vista Outdoor

Washington Prime Grp

Cash to Boot:

Aetna

Baxalta

BRE Properties Inc.

CareFusion Corp

Conversant

Covidien plc

DirecTV

ESB Financial

Express Scripts

Family Dollar

GGP Inc

Integrys

Johnson Controls

Kraft Foods Group

Lender Processing

Pharmacyclics

Questcor

Rockwood Holdings

Tim Hortons

Other Calculators:

Baxalta Inc split-off

Carrier Global split-up

Civeo domicile change

Coty Inc split-off

Deutsche Bank rights

Express Scripts redemption

Liberty Broadband rights

Medtronic domicile

NetScout split-off

Otis Worldwide split-up

Praxair stock merger

Synchrony split-off

Time Warner Cable partial

TRI Pointe split-off

United Tech split-up

Zoetis split-off

GLD

We explain in plain English the events that can affect your cost basis and the steps you need to take to calculate it. We give you ideas for questions to ask and where to go to find

the information you need.

Why do we even care about cost basis? Because you are going to need to know it when you sell the asset. The taxable capital gain will be the difference between the selling price and your cost basis. The higher the cost basis, the less capital gain tax you will have to pay.

Your cost basis depends upon your answers to the following questions:

• How did you acquire it? Did you buy it, inherit it, receive a gift, or receive a distribution from an IRA, a 401k, or a trust ?

• Are you required to amortize bond premiums or accrete bond discounts and what method are you allowed to use?

Stock Lookup Tool (click on picture)

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• What kind of bond or note do you own -- taxable or tax-exempt?

• Did you reinvest dividends?

• Did you own a stock previously and sell it at a loss in a "wash sale"?

• Did you sell stock that you received as a gift at a gain or a loss?

• Were there any splits, corporate reorganizations, spinoffs, split-ups, or split-offs?

• Did your stock undergo a corporate merger for all stock, all cash, or with "cash to boot"?

• Did you invest in bitcoin, ethereum, or other crypto currencies that forked?

• Did you own a stock that had return of capital payments?

• Did you receive a capital gain allocation?

• Did you receive multiple securities in a merger and how do you determine cost basis for each one?

• Did you receive a liquidation distribution from a company?

• Did your company move to a foreign country through a corporate inversion?

• Is your investment a "covered security" under the new cost basis reporting rules for Form 1099 reports and what default method did you choose?

• Did you receive bankruptcy proceeds from a stock or bond in the form of multiple new securities (e.g. GM/Motors Liquidation Corp) or in cash (e.g. Lehman Bros Holdings Inc)?

• Did the company make a "deemed redemption" distribution to you?

• Were you required or did you elect to allocate part of your cost basis to stock rights that you received?

• Did the bond, unit trust, or mortgage-backed security (e.g. "GNMA's") you owned make any "return of principal" payments?

• Did you acquire the investment from a related party, such as a family member?

• Did you receive shares when an insurance company demutualized?

• Did you deduct depletion expense on an oil royalty trust?

• Did you report income or receive distributions from a master limited partnership?

• Did you deduct depreciation, make improvements, or claim tax credits on your personal residence?

• Do you have any "investment in the contract" for tax-deferred annuities?

• What expenses did your Commodity ETF holding gold or silver bullion incur?

• How do the tax rules for the Exchange-Traded Products (ETPs) impact your cost basis?

Click on the navigation tabs above for your type of investment security (stocks, other assets, bonds, mutual funds, etc.) for help with these questions and for more information.

Information provided is intended solely for cash-basis U.S. citizen individual taxpayers and is believed to be accurate for most cases but is not guaranteed. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please email costbasis@gmail.com with your comments. If this website has been helpful to you, please consider making a donation to support our efforts.

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