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ConocoPhillips Message Board

  • rantk81 rantk81 May 2, 2012 1:46 PM Flag

    Cost Basis Calculation - I think this is correct

    Here is my calculation for figuring out the cost basis. I am not guaranteeing that this is correct, however, from what I've read online, it seems right to me. Please let me know if any of you spot any errors. I hope this post is helpful.

    The IRS lets you use the closing price, opening price, or volume-weighted-average price of the stocks -- on the first date where the new shares are trading excluding the spun off company. For the calculation below, I will use the closing prices that Yahoo historical prices lists on 5/1/2012

    COP Closing Price on 5/1/2012 = 56.51
    PSX Closing Price on 5/1/2012 = 32.76

    Now, we must adjust for the fact that we have 2 COP shares for every PSX share. Let's calculate the denominator value for our percentage of the cost basis that will be attributed to each company:

    (2 * COP) + (1 * PSX)
    (2 * 56.51) + (1 * 32.76) = 145.78

    Now, let's calculate how much of the 145.78 value is attributed to the COP shares:

    COP = (2 * 56.51) / 145.78 = 77.5277816%

    And, the calculation for how much of the 145.78 is attributed to the PSX shares:

    PSX = (1 * 32.76) / 145.78 = 22.4722184%

    So, before the spinoff, find out what your total cost basis was for all of your shares of the pre-spinoff COP, and let that value be 'B'. Then, the cost basis for COP and PSX is as follows:

    COP Cost Basis = (B * .775277816)

    PSX Cost Basis = (B * .224722184)

    Hope this helps.

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