WHAT TO DO WITH THIS TAX WISE?

[RDOCK]

When Prudential Insurance went public many moons ago I was given 51 shares of stock at no cost to me because we had a small life insurance policy with them. If I sell this stock I do not know what I have to claim. I've asked a few people and they don't seem to know. Will I have to claim the whole shot. In most cases they ask what you paid for it and will not accept ($ 0 .Thanks for your help!

[boneil]

We do our taxes with Turbo Tax, and the one time we had long term capital gains, it was just entered as such and the program does its thing. If the program doesn't accept the cost as $0, then I would enter it as .01. I think the gains just gets figured into your income and is taxed with that. I could be wrong. Turbo Tax and the wife makes me ignorant of anything tax wise. I just know short term cap losses

[CatFan]

You can Google Prudential demutualization cost basis and you'll get the whole scoop, but your cost basis is $0 so you'll owe tax on the full present value of the original shares at time of sale. I don't know how your account works, but they pay dividends and you should have been receiving 1099s over the years. If you got cash for the dividends, it won't affect the sale, but if you reinvested the dividends in more stock then the sale becomes a little more complicated. They have a transfer agent who will be able to help you, and you'll need to contact them anyway if your shares aren't being held by a broker.

[d'Wayne]

Any dividends you reported and paid taxes on are added to the stock basis, so you 'basis' may not be zero now.

[CatFan]

Any dividends you reported and paid taxes on are added to the stock basis, so you 'basis' may not be zero now.

I'm not an expert by any means, but I don't think cash dividends change cost basis. Only dividends issued as stock do that, and that's only because the number of shares changes. Many people treat dividends as changing cost for net growth calculations, but for tax purposes they have no effect as far as I know.

[RDOCK]

You can Google Prudential demutualization cost basis and you'll get the whole scoop, but your cost basis is $0 so you'll owe tax on the full present value of the original shares at time of sale. I don't know how your account works, but they pay dividends and you should have been receiving 1099s over the years. If you got cash for the dividends, it won't affect the sale, but if you reinvested the dividends in more stock then the sale becomes a little more complicated. They have a transfer agent who will be able to help you, and you'll need to contact them anyway if your shares aren't being held by a broker.

Thanks CatFan! I went to that site and their was quite a few responses to that question. It did give me a better understanding but it seems their is still some confusion but some of the answers did clear up some of my questions.