Long-held stock is stock you own for longer than a year. When you sell your stock, your gain or loss on the sale is determined by finding the difference between your cost basis and the amount you receive for the sale. Gains you incur from the sale of long-held stock are subject to special capital gains tax rates of up to 15 percent of the gain. This rate is lower than that applied to most ordinary income.
Determine the price you paid for each share of stock. Because share prices change each day, if your shares were purchased on multiple days, you must identify the different prices you paid in each purchase. Use an Internet historical price tool to locate old stock prices if you’re unable to identify the amount the paid for stock on a certain date. Many finance websites contain features that allow consumers to easily search for historical investment data.
Note any commissions, transfer fees or other broker expenses you incurred to process your purchases. Many brokers charge a fee to make stock purchases on your behalf. Divide the total expense by the number of shares you own. The result is the per-share investment expense.
Add the per-share investment expense to the per-share cost basis you calculated in Step 2. The result is your cost basis in the long-held stock. When you sell stock, your broker must indicate the shares that were sold and report the income from the sale to the IRS. It is your responsibility to gather cost basis information to properly report any income you gain from the sale.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.