How Do You Calculate Weighted Average Shares With Stock Split?
Companies split their stock for several reasons; the primary reason for stock splits is to control the price in the market. Investors are responsible for maintaining cost basis information for federal income tax purposes. Investors can choose to maintain cost basis on an average-per-share basis or a specific share basis. Stock splits affect the cost basis per share of stock. Cost basis recalculations after a split are quite straight forward. Determine the total cost basis before the stock split. Cost basis will generally be what you paid for the stock. Other rules apply if you received the stock as a gift or inheritance. Stock dividends received change the number of shares you have. Receiving stock dividends does not change the total cost basis. Determine the number of shares after the stock split. If you had 100 shares before a two for one split, then you now have 200 shares. If you had 100 shares before a three for one split, then you now have 300 shares. Use a calculator to divide t
