We were awarded 574 shares of a company through a spin-off transaction. One year after the award, we sold 300 shares. What are tax implications on this sale?

Forum|Forum|3 years ago
February 13, 2023
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TurboTax Online

Best answer by PattiF

You would need to find the cost basis of the shares that were sold. You can check online for information from the original and spin-off company to see if there is any guidance for the valuation of the new stock.

A company's stock price after completing a spinoff depends on whether any of the spun-off entity was retained. In a complete spinoff, the stock price of the company right before the spinoff should theoretically be equal to the sum of its post-spinoff stock price plus the initial stock price of the spun-off company. Spin-offs are reflected on your brokerage statement, and each broker has different formats.

@michelridgeway

robtm

Employee

If the stock was sold exactly one year from when you received it, it is a long-term capital gain or loss. Any time less than that it is a short-term gain or loss.

PattiFAnswer

@michelridgeway

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michelridgewayAuthor

Thank you. This is for 2023 taxes and of course rates may change but I am sure the method of calculation will be the same.

DianeW777

Yes, the method will be the same. To be clear on the difference between long and short term holding periods see the rules below.

Long term is a holding period of more than one year and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)

@michelridgeway

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