Re: Cost basis for dividend reinvestment
posted at 2/8/2012 10:31 AM EST
In Response to Re: Cost basis for dividend reinvestment
[QUOTE]In Response to Cost basis for dividend reinvestment : Dear fairnsquare: You are correct, it does apply to mutual funds and it is a GIANT PITA! That said, there is nothing wrong with supplying your broker with your spreadsheet and designating a particular fractional share as being sold in combination with other purchases, so long as the selected whole and/or fractional shares total the number of whole shares being sold (specific stocks must trade in whole shares, where mutual fund shares may be traded in fractions by sale back to the mutual fund). Unfortunately, the IRS has revised the Schedule D as an aggregation schedule with the details of stock and securities trades reported on Forms 8329, starting this year. While it insists that specific information concerning quantity sold, security sold, date acquired, date sold, cost basis and sales price be detailed for each block sold in each trade, it does permit for the use of "Various" for the date of purchase, but not for the sales date. You will need to break out your trades between long and short term, at least, as they are reported on separate Forms 8329 and may NOT be commingled on the same Form 8329. As long as you conform to these strictures, you should be able to use the Specific Identification method, rather than the default method of first-in-first-out. Hope this helps in preparing your returns! Mark H. Misselbeck, C.P.A., M.S.T. Tax Principal, Katz, Nannis + Solomon, P.C.
Posted by MASocietyofCPAs[/QUOTE]
Thanks for the response, it's helpful. GIANT PITA indeed!!! LOL.
The said stock has been held in a large investment firm's brokerage account. I should have a one on one with the broker. They probably have all the dividend reinvestment data. In any event, I plan to have all the cost basis updated in their database.
If all the stock's cost basis data are updated at the brokerage, will TurboTax be able to access them? That may make it easier to identify and report the shares I sell.
I'm unaware of the Form 8329, and this one doesn't seem to be the right one:http://www.irs.gov/pub/irs-pdf/f8329.pdf