Cost Basis Requirements

What this video covers

• Why cost basis is purchase price plus commissions and fees, and how that $10 commission in the example changes the taxable gain
• How stock splits and stock dividends affect total cost basis versus per-share cost basis, and why the pie metaphor matters for exam day
• Why reinvested dividends increase total cost basis while return of capital decreases it, and what happens when basis is driven to zero
• The three mutual fund cost basis methods: first in, first out (FIFO), specific identification, and average cost, including which one the IRS defaults to
• How first in, first out (FIFO) versus average cost produces different taxable gains when multiple lots were purchased at different prices
• What distinguishes covered securities from non-covered securities, and who bears the tracking burden for each
• How Form 1099-B fits into broker-dealer reporting requirements and what the exam tests about Riley the representative's duties