The cost basis of your assets is adjusted for splits. A stock split reduces your cost basis per share, but not your total cost basis. Example: If you own shares in a growing company, such as Nike (NKE), for a long period, you are likely to see several splits over the years. Let’s assume you invested $5,000 in Nike stock 10 years ago and bought 100 shares at $50.
http://www.acapam.com/what-is-a-stock-split-and-how-does-it-impact-cost-basis-your-taxes/
One reason may be that the stock has gone up so much in price that it becomes unaffordable for many investors. The market price of the stock after the split depends on how many new shares are issued. If it was previously selling for $100 and there is a two-for-one split, the new market price of the stock will be $50.
http://www.bankrate.com/finance/taxes/stock-splits-capital-gains-taxes.aspx
Let's say you own 10 shares of stock that cost you $25 dollars a share to purchase and the stock is now up to $100 dollars a share when the company determines that it will split the stock two for one.
http://www.bankrate.com/finance/taxes/stock-splits-capital-gains-taxes.aspx
If Nike declares a 2:1 forward split, you then own 200 shares at $60 per share. The value of your investment is still $12,000. Your total cost basis remains $5,000, but your cost per share becomes $25 ($5,000 divided by 200 shares). Regardless of whether your stock splits, remember to factor in your transaction costs when calculating your cost basis.
http://www.acapam.com/what-is-a-stock-split-and-how-does-it-impact-cost-basis-your-taxes/
But let's say the company declares a two-for-one stock split. After the split, you'll own 200 shares, but those shares are now worth only $10 apiece, not $20. You own more slices of the corporate pie, 200 shares instead of 100 shares, but each slice is worth half as much. You still have the same $2,000 worth of pie, it's just cut into more pieces.
http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2007-10-18-cost-basis-stock-split_N.htm
For instance, if you buy 100 shares of Nike at $50 a share and pay $10 in commission, your cost basis per share is actually $50.10 a share.
http://www.acapam.com/what-is-a-stock-split-and-how-does-it-impact-cost-basis-your-taxes/
A: When a stock splits is shares, it's the financial version of slicing a pie into more slices. If you own 100 shares of a $20 stock, you own $2,000 worth of the company.
http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2007-10-18-cost-basis-stock-split_N.htm
If you sell the 20 shares of stock for $50 per share, you will have a capital gain of $750 ($50 selling price x 20 shares less $12.50 adjusted cost basis x 20 shares). So you pretty much end up in the same place with minor differences for price fluctuations in the real world marketplace.
http://www.bankrate.com/finance/taxes/stock-splits-capital-gains-taxes.aspx
You should have the cost basis, since it would have been your basis even if the spinoff never happened. Let's say you bought 100 shares of Altria for $70 a share before the spinoff. To figure your cost basis in Altria after the spinoff, multiply $70 by the allocation factor of 30.5%, or $21.35 a share. To figure your cost basis in Philip Morris International, multiply your original Altria cost basis of $70 by the allocation factor of 69.5%, or $48.65. And that's it. If you have any questions, the example above is based on a helpful tutorial on the spinoff from Altria.
http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2008-04-24-altria-philip-morris-tax-basis_N.htm
And let's say you bought your 100 original shares at $15 each. Don't make the mistake of reporting your cost basis on Schedule D as $3,000 (multiplying the 200 shares that you now own by the $15 a share you paid originally). Even though you own 200 shares, your total investment is still only $1,500.
http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2007-10-18-cost-basis-stock-split_N.htm
cost basis of a stock split
If you own 100 shares of a $20 stock, you own $2,000 worth of the company.