Corporate Action

Stock Splits, dividends, mergers, acquisitions and spinoffs are all examples of corporate actions. For example, a company may decide to split its shares 2:1, leaving shareholders with twice as many shares as they had before. In many cases, a corporate action will result in a new position or a change to the cost basis of the security.

As a result, investors should make necessary cost basis adjustments for each security. With thousands of corporate events that affect a stock’s cost basis, the odds are good that an investor will encounter one sooner or later. some corporate actions are easy to manage, while some need more manual calculations. As every corporate action type has its own rules, the investors must learn if they want to fill their Schedule D forms accurately.

Wash sale activity can further complicate the arduous task of tracking and adjusting for corporate actions. TradeMax’s wash sale algorithms are synchronized with corporate action activity to alleviate this problem.