Record-Keeping
DRIPs can complicate record-keeping for tax purposes.
Investors need to track the cost basis of the additional shares purchased with reinvested algostocks.com dividends to accurately calculate capital gains or losses when the shares are eventually sold.
- Example: Over several years, an investor reinvests dividends to purchase additional shares at varying prices. Accurate records of each reinvestment transaction are necessary to determine the cost basis and calculate capital gains or losses upon sale.
State and Local Taxes on Dividends
In addition to federal taxes, dividend 주식 income may also be subject to state and local taxes, depending on the investor’s place of residence.