Determining the cost basis of your stocks
is a multi-step process. It depends upon:
(1) How you acquired it.
(2) Whether there have been corporate
reorganizations (spinoffs, exchanges,
or mergers) or corporate actions
(stock splits or reverse splits.)
(3) Whether dividends paid have included
any "return of principal" payments.
(4) Whether you sold it at a loss and
bought it back within thirty days.
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Let's get started! First answer this question, then come back here to find out about
further adjustments you might have to make. How did you acquire the stock?
→ I bought it
→ I received it as a gift
→ I received it as a distribution from my IRA
→ I received it as a distribution from my 401k
→ I inherited it
→ I received it in a stock merger
→ I received it in a "cash to boot" merger
→ I received it in a corporate split-up
→ I received it in a corporate split-off
→ I received it in a corporate bankruptcy action
→ I received it in a mandatory conversion
→ I acquired it by exercising stock options
→ I received it as a trust distribution
→ I acquired it from the demutualization of an insurance company
→ I acquired it in another way not listed
The next step is to chronologically account for any "return of principal" payments,
stock splits, spinoffs of other stock, or other corporate actions or reorganizations.
It is important in applying these adjustments to follow in the same order as the date
it occurred. Adjustments to cost basis can arise if:
→ My stock made return of capital payments.
→ My stock had a stock split or reverse split.
→ My stock had a spinoff.
The last step is to see if the following rules apply to you:
→ Wash sale rules if you sold the stock thirty days before or after you bought it.
→ Related party rules if you bought the stock from a family member or related party.
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HELP! I HAVE NO IDEA HOW I GOT THIS STOCK!
If you have absolutely no recollection of buying a stock and no idea where it came from, a good place to start is with our stock lookup tool.
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| Stock Lookup Tool |
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If your particular stock is not in our database, the next step is to ask your stockbroker for a copy of the corporate history of the stock. Your broker/dealer will have access to extensive databases and reporting services that list all the corporate actions and reorganizations for a stock. You will most likely recognize the origin of a stock if you get this report. In many cases, a simple name change has occurred and you will recognize the former stock name as one that you purchased. For spinoffs from companies that you recognize as ones you purchased in the past, you would then need to go to our spinoff calculator or to the corporate website to find the cost allocation factors to apply to your cost for the original shares in order to arrive at your cost basis for the spinoff shares.
If you do not have an established relationship with a stockbroker, you can try calling the state of incorporation listed on the front of the stock certificate. Ask for the Corporation Division of the Secretary of State's Office.
There are also services which investigate the origin and current value of stocks for a fee. Try Old Stock Research or Old Stocks.
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