>>How would we calculate the basis for these dividend shares, though?<<
I believe this link answers the question:
fairmark.com
....
Determining Your Basis
When you receive additional shares as a result of a
non-taxable stock dividend or split, your total basis in your
stock remains the same. The basis is divided among the
shares you already owned and the new shares in proportion
to the value of the shares. In the usual case, where the new
shares are exactly the same as the old ones, the value is the
same, and basis is allocated equally to each share.
Example: You own 400 shares of XYZ with a
basis of $33 per share (total basis of $13,200).
XYZ declares a 10% stock dividend. You
receive 40 additional shares and now own a
total of 440 shares. Your total basis is
unchanged, so your basis per share is now
$13,200 divided by 440, or $30.
Example: You own 150 shares of ABC with a
basis of $24 per share, and another 100 shares
of ABC with a basis of $28 per share. The
stock splits 2-for-1. After the split, you own
300 shares with a basis of $12 per share, and
200 shares with a basis of $14 per share. (This
is true even if you receive a single certificate
representing your 250 new shares.)
Holding Period
You are treated as if you held the new shares as long as you
held the old shares. For example, if you bought 400 XYZ on
June 10, 1994 and received 40 new shares in a non-taxable
stock dividend on November 10, 1997, any gain or loss on a
sale of the 40 new shares will be treated as a long-term
capital gain even if you sell them immediately after you
acquire them.
....
Kurt |
