hey taxman, how have you been? Well I hope. Question for the Group:
I have been through multiple splits with MSFT over the years and last night I was in a discussion with a friend of mine when the topic of stock splits came up and I suddenly realized that I was not clear on an important issue regarding my beloved MSFT shares. The question was centered on all of those shares that I've received through MSFT stock splits over the past few years --- question being what is my cost basis in the newly received shares from the stock splits, the basis in the original shares that I purchased for which each share I owned I received one additional share (assuming 2:1 split) through the split, or since MSFT splits take the form of stock dividends, is my cost basis in newly received shares through the splits something different, something like the Market closing price on the date the stock dividends are issued?
For example, I understand that for each 2:1 stock split in MSFT over the past couple of years, my cost basis in each share of stock has essentially been cut in half each time. So if I had 10 shares with a basis of $8, and the stock was split 2:1, my new basis in *these shares* would be $4. But for the additional 10 shares that I would receive on the split date (assuming a 10 share dividend), would my basis in these newly issued shares to me be $4 as well, or would they be a market valuation of the shares on the date of the issuance, such as $65 per share for instance?
Any and all help on this issue would be extremely helpful as this is probably something I should have a firm grasp of as we head towards a decision by Jackson.
Thanks in advance,
Teflon |
