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Cost Basis Per Share Formula:
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The Cost Basis Per Share represents the original value of a single share of stock for tax purposes, including the purchase price plus any commissions or fees. It's used to determine capital gains or losses when shares are sold.
The calculator uses the following equation:
Where:
Explanation: This calculation determines the average cost per share when purchasing stock, which is essential for accurate tax reporting when selling.
Details: Accurate cost basis calculation is crucial for determining capital gains taxes, tracking investment performance, and making informed selling decisions.
Tips: Enter the total amount paid for the shares (including any fees), the commission amount separately, and the total number of shares purchased. All values must be positive numbers.
Q1: Why include commissions in cost basis?
A: Commissions are part of the total acquisition cost and therefore should be included in your cost basis for accurate tax calculations.
Q2: How does this differ from average cost basis?
A: This calculates the cost basis for a single purchase. Average cost basis would combine multiple purchases over time.
Q3: What if I received shares as a gift?
A: For gifted shares, the cost basis is generally the same as the original purchaser's cost basis (carryover basis) or the market value at time of gift (if lower).
Q4: How do stock splits affect cost basis?
A: In a stock split, your cost basis per share adjusts proportionally (e.g., in a 2-for-1 split, your cost basis per share would be halved).
Q5: Should I use FIFO or specific identification?
A: This depends on your tax strategy. FIFO (First In, First Out) is default, but specific identification of shares may offer tax advantages.