Discussion:Application of Sec 1368 to 2 blocks of S stock
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Discussion Forum Index --> Tax Questions --> Application of Sec 1368 to 2 blocks of S stock
| 21 December 2007 | |
| My recollection is that when a taxpayer acquires S stock in 2 separate transactions, he must track basis for each block separately.
He can't combine his investment to simplify the adjustments that must be made as the corporation earns money and makes distributions. But I can't find authority for this recollection. Does anyone have a cite? I do not want to advise my client based upon my hazy recollection. Thank you as always! | |
| 21 December 2007 | |
| stock basis is supposed to be FIFO unless the taxpayer specifies which block of stock is being sold and the broker acknowledges it in writing within the normal time frame of selling stock | |
| 21 December 2007 | |
| Thank you Kevin for your common sense reply. Also, Reg. 1.1367-1(h) Example (2) illustrates the separate tracking of adjustments required if the taxpayer buys more than one block of stock. | |
| 21 December 2007 | |
| JAD, your recollection is correct. See Reg ยง 1.1367-1(b)(2). | |
| 21 December 2007 | |
| Thanks Riley.
The news keeps getting worse. This guy is going to have STCG related to new shares while he has basis remaining in old shares. I am doing most of my research in an old "Federal Income Taxation of S Corporations" by Eustic & Kuntz. I didn't realize how old this resource is, and I am going to update pronto. Does anyone have an opinion as to what is a better source - an updated version of this text, PPC, something else? Thank you all. | |
