1. What is a Stock Split Cost Basis?

A stock split cost basis calculation determines the new per-share cost basis after a stock split occurs. This is important for accurately calculating capital gains or losses when you sell the shares.

2. How Does the Calculator Work?

The calculator uses the stock split formula:

Where:

• \( Old\ Basis \) — Original cost basis per share (USD)
• \( Split\ Factor \) — Ratio of the split (e.g., 2 for 2:1 split)

Explanation: The formula adjusts your original cost basis proportionally to account for the increased number of shares from the split.

3. Importance of Cost Basis Calculation

Details: Accurate cost basis is essential for tax reporting when selling investments. It determines your capital gains or losses, which affect your tax liability.

4. Using the Calculator

Tips: Enter your original cost basis per share and the split factor (e.g., enter 2 for a 2-for-1 split). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical split factor?
A: Common splits are 2:1, 3:1, or 3:2. The split factor would be 2, 3, or 1.5 respectively for these examples.

Q2: Does a stock split affect my total investment value?
A: No, a split only changes the number of shares and price per share - your total investment value remains the same.

Q3: How do I handle multiple splits?
A: Apply each split factor sequentially to your original basis, or multiply all split factors together first.

Q4: What about reverse splits?
A: For reverse splits (e.g., 1:2), use the reciprocal of the ratio (e.g., 0.5 for 1:2 split).

Q5: Where can I find my original cost basis?
A: Check your brokerage statements or the original purchase confirmation for the per-share purchase price.