Important amounts adjusted when stock splits

Motley Fool

Q: A stock I own split 3-for-1. How do I figure my taxable gain when I sell the shares? — L.L., Syracuse, New York

A: Imagine that you bought 100 shares for $24 (initial cost: $2,400) and they were trading at $30 before the split, for a total value of $3,000. The split gives you three shares for each one you own, so post-split, you’ll own 300 shares, worth a third as much ($10 each), for a total of ... $3,000. Not much has really changed.

For tax purposes, the “cost basis” of your purchase, which was $24 per share pre-split, is now a third of what it was: $8. But if you sell, your capital gain will be the same as it was pre-split. For example, selling now, your gain would be around $600 — your $3,000 in sale proceeds (less your brokerage commission cost) minus your $2,400 purchase price (plus your commission cost).

When a stock is split, dividends per share, earnings per share and other figures based on share count all get adjusted accordingly.

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