How to Declare Stock Splits on Income Tax

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When stocks first split, all someone has to do is track the number of shares that they initially held, their cost bases and the number of shares they held after the split. Report cost bases and shares that are being sold to declare stock splits with help from a personal asset manager in this free video on investing in the stock market and money management.

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Video Transcript

Hi, I'm Roger Groh at Groh Asset Management. Today, we're here to talk about stock splits, and the implication on your income tax when it comes time to tell the IRS that there's been a stock split. Well, initially when stocks split, you don't have to do anything. All you have to do is track the number of shares that you initially held, and then... and your cost bases, and the number of shares that you hold after the split, and the reduction is cost bases that comes along with it. Really, the after tax effect is nothing. When it comes time to do your income tax, i.e., you've sold some of those shares, all you do then is report the cost bases and the shares that you're selling, and the number, and report that to the IRS, and they're happy campers. If they have any questions, you can always go and print out a long term chart of that stock, where it shows the dates that the stock split, and the percentage splits that went along with it. Now, stock splits are different from stock dividends, and in a separate category entirely when it comes to tax. So, be very careful whether you've received a stock dividend, or whether you've received a stock split. I'm Roger Groh, and that's how you deal with stock splits on your income tax.


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