How do I determine cost basis for DRIP shares after multiple stock splits?

What about the Kyndryl spinoff from McDonald's? How does that factor into cost basis calculations? Also, do fractional shares complicate things further when using FIFO?

McDonald's hasn't had a Kyndryl spinoff - that was specifically an IBM transaction from 2021. For any spinoff, your original cost basis gets allocated proportionally between the original company and the spun-off company based on their relative fair market values on the distribution date. Fractional shares don't really complicate FIFO calculations. You just start with your oldest shares and work forward chronologically, regardless of whether you're selling whole or fractional amounts. Your brokerage should track these lots for you, including all the DRIP purchases which would each have their own cost basis and purchase date.

How exactly does that work? Do you have to input all your historical purchase data manually or can it pull it from brokerages somehow?

Sounds interesting but I'm skeptical. How accurate is it with older transactions? My concern with these types of tools is they might not account for corporate actions from 20+ years ago correctly.

You can upload statements or transaction records and it extracts the data automatically. It saved me from having to manually enter hundreds of small DRIP purchases over the years. For older transactions, it was surprisingly comprehensive. It had data on corporate actions going back decades - even some obscure spinoffs and mergers I'd forgotten about. The system has a database of historical corporate actions and automatically applies them to your holdings based on the dates.

Wait, how does this actually work? Do they just call the IRS for you or what? I've been trying to get clarification on cost basis for some old Disney shares for weeks.

Yeah right. I've tried everything to reach the IRS and nothing works. Their hold times are legendary. I'll believe this works when pigs fly.

They use a system that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, you get a call connecting you directly to them. You don't have to sit there listening to that horrible hold music for hours. It doesn't guarantee you'll get an agent who specializes in your specific issue, but in my experience, they were able to transfer me to someone who could help with my cost basis questions once I was connected. It's really just a way to skip the hold time, which for me was the biggest hurdle.

Thanks for that tip. My situation is definitely with shares from before 2011. How exactly do I specify which shares I want to sell? Do I need to contact the broker by phone, or is there usually some way to do this online?

Most brokerages now let you select specific lots to sell through their online trading platforms. Look for options like "Select Lot" or "Specify Lots" when placing your sell order. You'll usually see a list of your available lots with their purchase dates and cost bases. For older shares that predate electronic records, you might need to call them. Just be sure to do this before executing the trade - you can't go back and choose specific identification after the fact.

You can request historical price data from your broker or use historical price databases online. For really old shares, sometimes your best bet is to use the closing price on the date you know you acquired them as an estimate. The IRS requires a "good faith effort" to determine cost basis.

That's really helpful advice about transfer agents! I'm dealing with a similar situation with some old AT&T shares from the 1980s that went through all those Baby Bell spinoffs. Do you know if there's a centralized database or website where you can look up which transfer agent handled specific companies during different time periods? It seems like companies switched transfer agents pretty frequently back then.

There isn't really one centralized database, but you can usually find transfer agent information in old annual reports or 10-K filings on the SEC's EDGAR database going back to the mid-90s. For earlier periods, you might need to contact the company's investor relations department directly - they often have historical records of which transfer agents they used. For AT&T specifically, given all those Bell System breakups and spinoffs, you might want to try contacting Computershare first since they handle a lot of legacy telecom stocks. They've been around forever and might have inherited records from previous transfer agents. Another option is to check with your state's unclaimed property division - sometimes old dividend payments or fractional shares end up there with documentation about the original holdings.

There isn't really a centralized database for historical transfer agent information, but you can try a few approaches. First, check the SEC's EDGAR database - older 10-K annual reports sometimes mention the transfer agent. Second, try calling the company's current investor relations department - they sometimes have records of previous transfer agents. For AT&T specifically, given all those spinoffs, you might want to start with the individual Baby Bell companies' current incarnations (like Verizon, AT&T Inc.) since they may have inherited some of those old records. Also, many of the major transfer agents like Computershare have been around for decades and may have acquired the records when smaller transfer agents went out of business.

I don't know of a centralized database, but you can usually find transfer agent information in old annual reports or 10-K filings on the SEC's EDGAR database. For AT&T specifically, you might try contacting Computershare since they handle a lot of the legacy Bell system records. Also, some state unclaimed property offices maintain records of old stock transfers that might help you trace the transfer agent history. The key is to start with what you know and work backwards chronologically through the corporate actions.

There isn't really a centralized database, but you can usually find this info by checking old annual reports or 10-K filings on the SEC's EDGAR database. Most companies listed their transfer agent in the shareholder information section. For AT&T specifically, they used multiple agents over the years - I think they switched from Bank of New York to Computershare at some point in the 2000s. You might also try calling the company's current investor relations department - they sometimes have historical records or can point you in the right direction. The AT&T situation is particularly complex because of all those spinoffs, but Computershare actually has some good historical tools for tracking those corporate actions if you can establish they were the transfer agent during the relevant period.

Unfortunately, there isn't really a centralized database for historical transfer agent information. Your best bet is to contact the current transfer agent for the company (or its successor if it was acquired/merged) and ask if they have historical records. For AT&T specifically, you might want to try contacting Computershare since they handle a lot of major utility companies now. They sometimes acquired records when they took over from other transfer agents. Another approach is to check old annual reports or 10-K filings on SEC.gov - these documents usually list the transfer agent that was being used at the time. You can search Edgar archives going back to the 1990s, though earlier records might be spotty. If you're really stuck, try calling the company's investor relations department directly. Sometimes they have institutional knowledge about which transfer agents they used historically, even if the records aren't easily accessible online.