Liquidating inherited stocks

This nets you a little more stock each time, so that, ultimately, you end up with more shares than you started with.However, even when dividends are reinvested, you receive a 1099-DIV with the dividends reported on it.

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Taxpayers generally have two options when calculating taxes owed after selling stock holdings, but there’s more flexibility for those who take action before selling the shares.

“It’s important to look strategically at what your long-term holdings are and what you’re planning on selling over the next few years,” says Greg Rosica, tax partner in the personal financial services office for Ernst & Young. Figuring out the tax basis of your shares When you sell shares, the tax gain or loss is calculated by comparing your tax basis in the shares sold to the sales proceeds, net of brokerage commissions and transaction fees.

That sounds easy enough, but in reality, the process can become complicated.

Say you didn’t keep track of your basis and have lost all of your transaction statements. First, check to see if you can get the information from your broker.

Depending upon how you receive dividends, you may need to plan ahead for tax day.

Specifically, it is important to understand the different types of dividends, what you can expect as far as paying taxes on them, and how to read the 1099-DIV tax form so you’re adequately prepared.

by Randy Frederick April 17, 2015 A long iron butterfly spread is a breakout strategy you might want to consider when you expect a stock or an ETF to experience a sharp move higher or lower, but you are uncertain which direction.

by Randy Frederick September 12, 2014 This 4-legged strategy is typically used when the underlying security is trading in a narrow range.

A DRIP, or dividend reinvestment plan, is a method that allows you to use your dividends to purchase more of the same stock instead of receiving the dividends in cash.

Simply put, instead of receiving .24 in dividends, the company automatically purchases for you however many shares (or portions of a share) that .24 will buy.

Investors should consider carefully information contained in the prospectus, including investing objectives, risks, charges and expenses.