Stock sale

Forum|Forum|2 years ago
April 18, 2023
1 reply
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I purchased stock through ESOP between 1982 and 1989, when I resigned from the company. I held the stock for 30 years, during which there was one split and all dividends were reinvested to purchase additional shares. I sold some shares in 2022, and the 1099-B indicated the acquisition date of the various share portions, though there were no entries in "Cost or Other Basis" and "Type of Gain/Loss" is Noncovered. How do I determine my tax liability based on this sale? Are the dividend reinvestments still considered as stock purchases from the ESOP?

AmyC

Your initial cost basis in the employee stock is how much you paid plus the amount of discount you received. Then, you used dividends to purchase more shares- regular shares. The basis of those shares equals the dividend paid.

It will be a long term gain. They are noncovered because the broker has no idea what your cost basis is after this many years.

If you don't know which shares you are selling, you will use the first stocks purchased, first stocks sold method or FIFO (first in, first out).

If you need to lookup historical prices, this site may help.

See About Publication 550, Investment Income and Expenses

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