Stocks (Options, Splits, Traders) 7 | Internal Revenue Service

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4. Stocks (options, splits, traders) 7

Question Do I need to pay taxes on the additional stock that I received as the result of a stock split? Answer

No. Stock splits don't create a taxable event; you merely receive more stock evidencing the same ownership interest in the corporation that issued the stock. You don't report income until you sell the stock.

In a stock split, the corporation issues additional shares to current shareholders, but your total basis doesn't change. Following a stock split, you must reallocate your basis between the original shares and the shares newly acquired in the stock split.

• Your overall basis doesn't change as a result of a stock split, but your per share basis changes. You'll need to adjust your basis per share of the stock. (For covered securities, your broker will track basis for you.)
  • For example, you own 100 shares of stock in a corporation with a $15 per share basis for a total basis of $1,500. In a 2-for-1 stock split, the corporation issues an additional share of stock to the shareholder for each share the shareholder owns. You now own 200 shares, but your total basis is still $1,500. Following the stock split, you must reallocate your basis between the original shares and the shares newly acquired in the stock split. Your basis per share is now $7.50 ($1,500 divided by 200) for each of the 200 shares.

Additional Information Tax Topic 409 - Capital gains and losses Publication 550, Investment Income and Expenses (Including Capital Gains and Losses) Category Capital gains, losses, and sale of home Sub-Category Stocks (options, splits, traders) Page Last Reviewed or Updated: 20-Nov-2025

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