How to Calculate Basis for Stocks When the Stock Splits and You Only Sell Partial Shares

Stock splits can result in fractional shares.
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Stock splits or reverse splits change the number of shares you own and their respective values. Often these splits result in a partial share being left over, where you have the option of receiving a cash payout for this partial share. This means you effectively sell the partial share at the fair market value. Like any stock sale, you must calculate the capital gains when reporting the exchange on your taxes. To properly calculate the capital gains, you must first recalculate the per-share cost basis and use it to calculate the fractional basis.

Step 1

Multiply the number of shares you originally purchased by the original per-share purchase price and add any broker fees. This information is available on your brokerage statement, or you can directly ask your broker. As an example, if you bought 55 shares for $20 each with a $50 broker commission, multiply 55 times $20 and add $50 to calculate your total cost of $1,150.

Step 2

Multiply the split fraction by the number of shares you originally owned to calculate how many shares you own after the split. The split fraction is typically voiced, for example, as three-for-two or 3/2. If you owned 55 shares, multiply 55 by 3/2 to calculate 82.5 shares.

Step 3

Divide the total cost by the number of shares you own after the split to calculate the adjusted cost basis. In the example, $1,150 divided by 82.5 calculates an adjusted cost basis of $13.94 per share.

Step 4

Multiply the partial share fraction times the per-share cost basis to calculate its cost basis. Continuing with the example, if you had 82.5 shares, the part to the right of the decimal point is the partial share. Therefore, you would sell 0.5 shares and multiply 0.5 times $13.94 to calculate the partial share's cost basis of $6.97.

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