How will the Amazon stock split affect my tax returns? | Personal finance
(Charlene Rhinehart, CPA)
e-commerce giant Amazon (NASDAQ: AMZN) finally pulled the trigger on its plan to split 20-for-1 shares this year. This means that you will receive 19 additional shares for each Amazon share in your portfolio. If you currently own two Amazon shares, you might jump for joy when you notice 40 shares in your account after the big day.
Before you get too excited, we’ll explain how a stock split works and how it might affect your taxes.
Is a stock split good?
While it may seem like you’ve hit the jackpot when you hear about a stock split, it’s not as glamorous as it sounds. You will receive additional shares of Amazon in your account, but the overall value of your shares will not change.
Let’s say you owned an Amazon stock valued at $3,000 before the split. After a 20-to-1 stock split, you now own 20 shares worth $150 per share. The total value of all your shares will still be $3,000.
Stock splits may not impact the value of your shares, but they are a great way to get more people to invest. Instead of paying $3,000 for a share of Amazon, investors will have the option of owning a full share for $150. If the four-digit stock price has kept you from owning a full stake in Amazon in the past, you’ll have a shot at joining the club after the stock split.