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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Colin Cody who wrote (685)	2/28/1998 5:05:00 PM
From: James Unterburger	Respond to of 5810

From the 1997 Publication 550: Page 39, Stocks and Bonds: "The basis of stocks or bonds you own generally is the purchase price plus the costs of purchase, such as commissions and recording or transfer fees." On this page is also stated the "FIFO" rule for selling stocks acquired at differing times, if the specific shares to sell was not indicated at the time of sale. I believe the instructions for Schedule D, included in the booklet for form 1040, discuss where to include the commissions on the sale of stock. In particular (please verify this by looking at the instructions), if the 1099-B form you get from your broker (1099-B lists all sales of securities I think) reports the net from the sale (the amount of money you received), then simply report that, as the commissions have already been deducted out. But if the 1099-B you receive reports gross proceeds, before commissions, then you must add the commission to the basis: this results in essentially two commissions having been added to the basis, the buy-side and the sell-side. It is done this way for gross proceeds so that the amounts entered in Schedule D, column (d), match the amounts reported on form 1099-B.