Author Topic: Questions on selling a DRIP  (Read 1201 times)

overwhelmed

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Questions on selling a DRIP
« on: December 14, 2016, 07:11:42 AM »
I have had a DRIP account with a utility for decades. My parents (before many on these boards were born) started small accounts for the kids. I am leaning heavily towards selling the shares and putting it into Vanguard. I spent quite a bit of time in the last few days trying to figure out the tax implications if I do close it out.

Between the information that is available for the account and the historical data I was able to get from Yahoo finance, I believe I have part of the information I need.

My understanding is:
  • Dividends count as purchases so I need to calculate every quarter to determine if it was a loss or gain
  • Any dividends in the last year is considered short-term gains/loss
  • Dividends older than that count as long-term gains/loss
  • In my plan account, all dividends after 12/31/1999 are listed
  • The first line item is 'transfer' of 55 shares' with no prices included, apparently just the number of shares I had when it changed companies (I am assuming)
  • I have -0- specific records from before that time
  • The stock split twice - a 3/2 in July of 1987 and a 2/1 in Feb. 2008
  • I have 2 stock certificates (although I'm pretty sure I just asked for certificates as opposed to it being actual direct purchases) so I do have dates & lot ID's for them

Sometime in the late 1980's I sold some stock through a brokerage service so I think I must have used a stock certificate for the sale. They use FIFO when selling shares so the oldest would have been sold. Not sure how much that helps me when I don't have any information but it happened so mentioning it just in case.
I also did occasionally sent them a check in the late 1980's-early 1990's ($50 or $100) but again have no records from that far back.

I'm stuck on how to account for pre-2000 activity.
I downloaded all of the historical data available from Yahoo finance (Jan 1980 is the earliest) so I can find the close price by quarter but have no idea how to back into dividends.

Providing I didn't just make stuff up & did basically understand what I need to do, does anyone have any suggestions on how to account for my missing data?
Thanks

seattlecyclone

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Re: Questions on selling a DRIP
« Reply #1 on: December 14, 2016, 09:41:18 AM »
How much money are we talking about here? You could make a reasonable guess and hope you don't get audited, or you could be super conservative and only claim cost basis for the purchases you have records for, assuming zero cost basis for the rest of the shares. Given the amount of inflation and market growth we've had since the 1980s, your cost basis is likely a small fraction of the current value anyway.

overwhelmed

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Re: Questions on selling a DRIP
« Reply #2 on: December 14, 2016, 10:51:22 AM »
Seattlecyclone -

It will probably cash out around 25k so not a huge amount. In the last 16 years, the dividends went from say a half of a share to just under 5 shares. I don't think this is going to be a big hit, the 'bigger' gains were generally on small dividends & the price hasn't swung dramatically really since the last split in 2008, just a lot of data to work with.

Thanks for the help

Reynold

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Re: Questions on selling a DRIP
« Reply #3 on: December 15, 2016, 09:44:12 AM »
My FIL had a situation like this, a DRIP for IBM shares that went back 3-4 decades, and he hadn't understood that he needed to keep all dividend purchase records for cost basis, he just kept end of year statements which didn't break out quarterly purchases, and even those were spread out among piles of records.  This doesn't help you, but in his case we had him just hang on to it until he passed away and the cost basis reset so we could sell it. 

The complexity of tracking all of that for small amounts, especially with splits and such, means I don't reinvest dividends from stocks and mutual funds, I let them accumulate in the brokerage cash sweep account and buy something specific with them.  In your case, it could be very hard to get all the cost bases, so I'd second the suggestion to either estimate very low or zero purchase prices for the shares you can't get.  An extra couple hundred in taxes at long term capital gains rates may not be worth spending days trying to piece it together, especially if you can charge it against a capital loss from selling something else.