Investment Test - Tell me the Cost

MBK

Just this morning with all the stress about IBM missing on its numbers, I decided to check on my holding. Something caught my attention!



So I looked up my three transactions:

Jan 2007 Buy 60 at $94.60 for $5684

Jan 2012 Buy 40 at $183.62 for $7353

Oct 2013 Sell 50 at $174 for $8693

Own 50 now worth $8154

Do I show a loss or a gain?

SCOUT5

I don't know what it's worth but seems you have about $87 a share invested, not counting transaction fees, taxes or other expenses. That's less than the 2007 price so I guess you are doing okay.

Bottom line is what is it worth now and and what will it be worth when you sell. Right now you are out over $4300 dollars so it's a negative outcome so far.

For your question, which shares did you sell?
You could have anywhere form a $394 gain to a $3955 gain, again, not counting fees, taxes etc.

perry shooter

if you still have the cash form the 8693 sale and you sell the 50you now have you will end up with spending. 13037.00and selling out
for 16847.00

He Dog

What he (Perry Shooter) said.

bigal125

If you average it, it would be:

100 shares at $13,037 ($5684+$7353). That works out to $130.37 per share, based on dollar-cost averaging.

When you sold 50 at $174 per share, OVERALL that is a gain. $174 -$130.37 = $43.63 per share gain over your AVERAGE cost.

It might depend on which shares you sold. I'm not sure if that comes into play here or not, since I'm going by your AVERAGE cost.

Perry Shooter is correct in his statement about your totals (spent $13,037 and sold for $16,847)

That would show you a total gain of $3,810. Note: DON'T count that money until you have it in your hands/accounts.

Big Al (I am not an accountant nor did I stay at a Holiday Inn last night, but I can <mostly> do math!) [;)][:)]

wpage

cost + interest = sum
sell price = sum
- or plus

If you won pay here... Uncle Sam[8]

neacpa

You should have a long-term gain of $1,635. When you sold in Oct 13, you should have had a long-term gain of $2,175. In Oct, 2013 you should have used an average per share cost to calculate your basis in it. But, if you did not, then the gain would vary. Between the 2013 sale and the current sale, you should have a total gain of $3,810 to pay Uncle Sam his share of.

Edit: Just noticed you asked about cost, not gain. It depends on how much of the basis (cost) you deducted on the Oct 13 sale. Your cost should be 1/2 of the original two purchases since you sold 1/2 of the original two purchases in 2013.

CaptFun

Are we taking opportunity cost into the picture?

nord

Simple question and simple answer. Your cost is simply what you paid in total for the securities purchased. You didn't ask about average cost.

Profit or loss, though you didn't ask, is the total amount paid to purchase versus total amount realized from sales. Three possibilities here. A loss, a wash, or a gain.

Capital gains or losses are a different story. In theory you'll take each share purchased, record the price paid, then record the proceeds at sale, and finally figure the difference for a gain or loss. Time held for each share may also be a factor when the tax man becomes involved. Reality may be a bit different but that's the theory anyway.

I suspect that taxes were figured on the shares sold as follows:

50 of the 60 shares sold in Oct 2013 cost you $94.60 each. (I'm unaware of whether this amount included associated costs.) Those 50 shares sold for $174 each and you paid taxes on the difference between purchase and sales price. In other words a gain.

You now own 50 shares. 10 purchased for $94.60 and 40 purchased at $183.62. Assuming you sold all shares today at $163.00 then your gain will be $68.40 per share on the first 10 and a loss of $20.62 on the remaining 40 purchased at $183.62.

Rough math tells me a gain of $680.40 and a loss of about $820.00. In other words a net loss of about $140.00.

skicat

the cost was $3560.80 for not buying all 100 shares in Jan 2007. What were you thinking?!?![:)]

mogley98

Since the 50 shares you still own have no set gain/loss until it is realized, I suppose we could only count the 50 you sold at a profit.

Without knowing your tax costs I can only figure it is the cost of the shares at 130.37 from the sale price of 174. Or 2181.5 less commissions on both buy and sale?

Don McManus

Your average cost is $ 130.37 per share.

You sold for $ 174.00 per share.

In FY 2013, you would have paid taxes on a profit of $ 2174.50 less brokerage fees.

You currently show a gain of $ 32.71 per share but until sold, there is no realized gain or loss.

bigoutside

quote:Originally posted by MBK
Just this morning with all the stress about IBM missing on its numbers, I decided to check on my holding. Something caught my attention!



So I looked up my three transactions:

Jan 2007 Buy 60 at $94.60 for $5684

Jan 2012 Buy 40 at $183.62 for $7353

Oct 2013 Sell 50 at $174 for $8693

Own 50 now worth $8154

Do I show a loss or a gain?




You'll have to pull your 2013 tax year schedule D to know.
Your cost basis now is dependent upon what cost basis lot you used previously.

MBK

The Results




All those replies were interesting and as a group, quite confusing.

The account is at Fidelity, and is an IRA, so there was actually no tax effect, and the cost was only needed for performance purposes. But I was confused originally by seeing a loss. What happened is that Fidelity took the default option to use FIFO lot accounting. First in, first out. So they allocated 50/60th of the cost of the original purchase sale, and showed a profit which in a taxable account would FRONT LOAD the payment to the IRS.

Note, the Cost Basis is not impacted by the profit you take, it is merely the allocation of cost to the shares that remain.

Total cost for both lots $13037

Cost subtracted from the first lot for sale of 50: $4737

Remaining cost basis ... $8300


You actually ave the option to select actual "lots" to account for in a sale, you have to tell your broker. You can also go average cost, LIFO, or FIFO.

Thanks for all your participation.