Maintaining a record of common stock transactions is required for investors to measure their performance and report the results for income tax. A stock transaction is recorded when shares are purchased and when they are sold. Both events capture the company name of the stock and the number of shares. Every purchase record indicates the date and cost. Each sale accounts for a date and proceeds received. When matching each sale to a prior purchase, the oldest owned shares of a specific stock are typically considered sold first.
Enter a description of the purchased stock in the first column of a ledger. Examples are “General Electric” or “Apple Corporation.”
Place the date of stock purchase in the next column of the ledger.
List the number of shares purchased in the next column along with the price paid per share. For example, “100 @ $30” is a commonly used format.
Note the total stock cost including any commission paid in the next ledger column. This is the “cost basis” for tax purposes.
State the sale date in the first blank column of the line listing the original purchase. This synchronizes the stock sale with the purchase.
Record the sales proceeds after commissions paid in the next column.
Note in the final column whether you owned the stock for more than one year or not. A holding period of more than one year is recorded as “long term.” Ownership for one year or less is “short term.” This will simplify quick identification of tax treatment without referring to the purchase and sale dates.
Your basis for common stock is usually the cost. However, shares given to you have a basis of either the fair market value when received or the basis of the previous owner. If you receive additional shares as a stock dividend, allocate your cost basis in the initially acquired stock among the new shares and those previously owned.
Items you will need
- Electronic spreadsheet or columned paper
- Stock purchase confirmation details from broker
- Stock sale confirmation details from broker