Reverse stock split

[DTS]

A 1-10 reverse stock split was declared for one of my client's stocks. She had 1783shs, then had 178shs.

How in the world do I show the basis for this stock??? Is it ten times the amount paid? Could someone give me a easy-to-read example to use?

I am clueless with this and really need your help, as quickly as possible.

Thank you so much,
Dennis

[JCH]

The basis is the same, your client just has fewer shares.

[DTS]

Split

JCH,

Thank you. After my post, I thought about it and it seemed to me like the basis would not have changed.

I just got a little frantic when I talked to the client and did not know about this.

Thanks again,
Dennis

[Bill Tubbs]

An example

A 1-10 reverse stock split was declared for one of my client's stocks. She had 1783shs, then had 178shs.

How in the world do I show the basis for this stock??? Is it ten times the amount paid? Could someone give me a easy-to-read example to use?

I am clueless with this and really need your help, as quickly as possible.

Thank you so much,
Dennis

Let's say the original basis was $1/share, or $1783 of basis. After the 1-10 reverse split, the basis of the 178 new shares would be $10/share -- for a total remaining basis of $1780. Since client ended up with 178 shares (not 178.3 shares), client likely received cash-in-lieu for 3 of the old shares -- so, the cost basis of the cash-in-lieu would be $3.

Bill

[DTS]

Split

Bill,

Thanks for showing me the example. This is what I did and it worked out just fine. After a little research yesterday, your example was confirmed! It's really pretty straightforward and I was making it way more complicated than it needed to be.

I was having a mini-breakdown yesterday then this was thrown at me and having never heard of it, I panicked.

Thanks again. I appreciate your help.

Dennis