How do stock splits affect my tax return?
A stock split isn't a taxable event and doesn't go anywhere on a tax return. However, a stock split does affect the cost basis of the stock and affects the gain/loss reported on your tax return when you sell the stock. The cost basis is divided among all of the shares including the new shares received from the stock split.
For example, if you own 100 shares of XYZ stock at a cost basis of $4,000 and then a stock split occurs and you end up with 200 shares of XYZ stock, the old cost basis per share of XYZ stock would be $40 per share, but after the stock split the cost basis per share of XYZ stock would be $20 per share.
For example, if you own 100 shares of XYZ stock at a cost basis of $4,000 and then a stock split occurs and you end up with 200 shares of XYZ stock, the old cost basis per share of XYZ stock would be $40 per share, but after the stock split the cost basis per share of XYZ stock would be $20 per share.
