How to Calculate the Stock Price on Split Shares
Calculating cost basis for stock shares is an important skill that all stock investors must learn. Fortunately, the process is relatively straightforward. The main key lies in keeping good records of the original stock purchase.
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Things You'll Need
- Details of the original purchase of the stock--date, number of shares, purchase price and any commission paid
Instructions
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Find the original record of purchase of the stock. Get the date, number of shares, dollar amount of the purchase and any commission paid. If the stock sold was bought through a series of purchases, get these details for each purchase.
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Find out how many times the stock has split between the time of purchase and sale, and the terms of the split. If you don't have this information readily available, then you will need to contact the stock transfer agent to get it. Go to the company's website and get a number for investor relations, and they should be able to direct you to the correct party.
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Calculate the basis according to the terms of the split. If you bought 300 shares of stock at $20 per share and it split twice at 2 for 1, then it's as if you really bought 1200 shares at $5 per share. Therefore, if you sell 600 shares at $15 per share, then you effectively gained $10 per share for a total of $6,000.
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Remember to adjust correctly if some of the stock sold was bought before a split and some after. If 100 shares of a stock were bought before a 2 for 1 split and 100 more afterwards, then that basis would be different than if all 200 shares were bought before (or after) the split.
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Tips & Warnings
Allocating basis between shares in complex split situations is not always a black and white procedure. For more information, consult your tax advisor.
