When I was in the sixth grade, my gifted class (oh yeah, work that into the conversation, Soper, like it's relevant at all) participated in some national stock market competition. Our little teams had fake money with which to "buy" stock over the course of several weeks. We didn't win, of course, but I think my team did come in the top 100, which was amazing considering I went to school in the poorest state in the country and we didn't even have our own textbooks (we used them during class and then passed them up at the end of the period so the next class could use them).
To celebrate my brilliant stock picking ability and the fact that I crushed the competition into whiny little piles of crap, my grandmother bought me two shares of Wal-Mart stock. Real, live stock!
After a couple of years of cashing $.20 dividend checks, I learned about dividend reinvestments and watched in awe as my little pile of stock grew. Over the years there have been stock splits and the occasional gift of more stock from my grandmother, which I always blithely ignored and left to accrue.
Last fall, in a fit of anger at Wal-Mart's unconscionable labor practices (and motivated a little by our EXTREME, BONE CRUNCHING POVERTY) I decided to sell the stock and put my grandmother's investment towards the adoption.
It won't pay for it, by any means, but those two little shares have gone a long way, baby. HOWEVER, the lesson for today is that, while stock will grow by leaps and bounds if left alone, it is a real bitch when you finally do sell it.
We are talking about eighteen years of stock splits and dividend reinvestments, people.
Figure the basis of stock splits in the same way as stock dividends if identical stock is distributed on the stock held. When the old stock and the new stock are identical the basis of the old shares must be allocated to the old and new shares. Thus, you generally divide the adjusted basis of the old stock by the number of shares of old and new stock.
O.K. Adjusted basis of stock divided by total number of shares equals new basis. For each purchase over the past eighteen years. Crap. O.K., we can do that, we just have to find the adjusted basis. Let's see what the helpful IRS regs say:
The basis of stock must be adjusted for certain events that occur after purchase. For example, if you receive more stock from nontaxable stock dividends or stock splits, you must reduce the basis of your original stock.
But, but, but that doesn't tell me anything! All that says is that you adjust the basis when you get dividends or when you have a stock split. But the other reg clearly says that you divide the adjusted basis by the number of shares. HOW THE FUCK DO YOU FIND THE ADJUSTED BASIS?
To find the adjusted basis of an initial investment, simply give the local head of the IRS a blowjob. Good pun, eh? Just kidding, God, I love my job, nobody ever fucking reads these IRS publications, I could write anything I damn well wanted to. I could say fuck all day and get paid to do it! Fuck! Fuck fuck fuck fuck! Ha ha, seriously, I crack myself up. If you really need to find the adjusted basis, you have to track down publication 551, because even though I could put it in this next sentence I find it's much more fun to track down information that could stick you with a penalty and possibly jail time if you report your tax incorrectly. It's like we're having a little scavenger hunt, isn't it? Who says the IRS doesn't know how to party?
O.K., publication 551. Let's see what it says:
Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the basis of the property. The result of these adjustments to the basis is the adjusted basis.
For more information about deducting or capitalizing costs, see chapter 8 in Publication 535.
And then this is the point when I gave up:
Decrease the basis of property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose.
Did you see that, folks? Decrease it by the amount you did do, or could have done, by the method with which you chose to do it?!
WHAT THE FUCK?
You know those commercials "Settle your IRS tax debt for pennies on the dollar?"
I think I may be making a call....
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