skip navigation

Search Help
Navigation Help

Topic Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

FAQs
Forms
Publications
Tax Topics

Comments
About Tax Map

IRS.gov Website

Frequently Asked Tax Questions

Capital Gains, Losses, Sale of Home - Stocks (Options, Splits, Traders)

  1. How do I figure the cost basis of stock that has split, giving me more of the same stock, so I can figure my capital gain (or loss) on the sale of the stock?
  2. How do I figure the cost basis when the shares I'm selling were purchased at various times and at different prices?
  3. How are reinvested dividends reported on my tax return?
  4. How do I compute the basis for stock I sold, when I received the stock over several years through a dividend reinvestment plan?
  5. How do I report participation in an employee stock purchase plan on my tax return?
  6. I purchased stock from my employer under a § 423 employee stock purchase plan. Now I have received a Form 1099-B from selling it. How do I report this?
  7. Should I advise the IRS why amounts reported on Form 1099-B do not agree with my Form 8949 for proceeds from short sales of stock not closed by the end of year?
  8. Do I need to pay taxes on the additional stock that I received as the result of a stock split?

Rev. date: 08/21/2012

How do I figure the cost basis of stock that has split, giving me more of the same stock, so I can figure my capital gain (or loss) on the sale of the stock?

If the old stock and the new stock are identical:
If the old shares were purchased in separate lots for differing amounts of money:

Rev. date: 08/21/2012

How do I figure the cost basis when the shares I'm selling were purchased at various times and at different prices?

If you can identify which shares of stock you sold, your basis is:
If you cannot adequately identify the shares you sold and you bought the shares at various times for different prices, the basis of the stock sold is:

Rev. date: 08/04/2012

How are reinvested dividends reported on my tax return?


Rev. date: 08/04/2012

How do I compute the basis for stock I sold, when I received the stock over several years through a dividend reinvestment plan?

The basis of stock that you received through a dividend reinvestment plan:
The first-in first-out rule means:

Rev. date: 08/04/2012

How do I report participation in an employee stock purchase plan on my tax return?

If you participated in an employee stock purchase plan:
The holding period requirement is satisfied if:

Rev. date: 08/04/2012

I purchased stock from my employer under a § 423 employee stock purchase plan. Now I have received a Form 1099-B from selling it. How do I report this?

You have taxable income or a deductible loss when you sell the stock. Your income or loss is the difference between the amount you paid for the stock (the option price) and the amount you receive when you sell it.  You generally treat this amount as capital gains or losses however, you may also have ordinary income to report.
The holding period requirement is satisfied if you do not sell the stock until the end of the later of:
If the holding period requirement is satisfied:
If the holding period requirement is not satisfied:
If the holding period requirement is satisfied but the option exercise price is below the fair market value of the stock at the time the option was granted:
If you do not satisfy the holding period requirement and sell the stock for less than the amount you paid for it, your loss is a capital loss, but you still may have ordinary income.

Rev. date: 08/04/2012

Should I advise the IRS why amounts reported on Form 1099-B do not agree with my Form 8949 for proceeds from short sales of stock not closed by the end of year?

For most taxpayers, Form 1099-B should match Form 8949, Sales and Other Dispositions of Capital Assets.  Regarding a small number of 2010 short sales, some non-calendar year taxpayers may have Forms 1099-B and 8949 which do not agree.  If you received a Form 1099-B for a short sale you entered into before January 1, 2011 but that did not close by the end of the taxable year, report it on line 1 or 3 of Form 8949, Sales and Other Dispositions of Capital Assets.  Enter the sales price in column (e).  If the short sale did not close in the year of your tax return, enter “Open Short Sale” in column (f) and the negative of the sales price in column (g).  When the short sale is closed in a later year, report any gain or loss on your return for that year. 
For calendar year taxpayers, if you entered into a short sale on or after January 1, 2011, you will receive a 1099-B for the year in which the short sale closed.  Both proceeds and basis information related to the short sale will be reported at the same time, so amounts reported on Form 1099-B should agree with your Form 8949.
 
For more specific rules refer to Publication 550, Investment Income and Expenses.

Rev. date: 08/04/2012

Do I need to pay taxes on the additional stock that I received as the result of a stock split?