When a stock splits, if the split ratio is anything other than 2 for 1, you might end up with a fraction of a share. Rather than issue a portion of a share, the company pays you cash instead. Your brokerage firm then reports the "cash in lieu" (often denoted as CIL) payment as sales proceeds on your Form 1099-B. Use our handy stock split calculator to compute the cost basis you have in those fractional shares. This will reduce your taxable income.
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Don't pay tax on all your "cash in lieu"
payments! You have basis!
Click on the image of the "cash in lieu"
stock split calculator to the right to
access our handy tool. It has data for
recent stock splits of companies such
as AIG, Assisted Living Concepts, and
Coeur D'Alene Mines already provided,
or else input your own data.
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| Stock Split Calculator for Cash in Lieu |
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It is especially beneficial to allocate
cost basis to the fractional share in
cases such as American International
Group (AIG). With the major losses
that most AIG investors have incurred,
allocating cost basis can turn a taxable
gain item into a tax-deductible capital
loss.
Stock splits for many widely-held stocks
are listed, excluding 2 for 1 stock splits
which would not result in any
fractional shares.
The calculator also works for reverse
splits and for dividends paid in stock,
rather than cash (unless they are
"payment in kind" dividends.) The
calculator can be used for the new
cost basis of the 3% stock dividend
usually paid by Tootsie Roll (TR)
annually. This is simply a case of
a stock split with a ratio of 1.03
per share.
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The calculator also works for the stock dividends recently paid by First Horizon (FHN)
where cash was paid in lieu of fractional shares. However, for some of the First
Horizon stock dividends (10/1/08 and 1/1/09), the fractional shares were not redeemed,
and the calculator should not be used since it assumes that cash in lieu was always paid.
If you know of other stock splits that result in fractional shares, please help us
build our database for the benefit of all users. Please send us the details so that
we can add it to the table of pre-filled values in the stock split calculator.
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