Assuming you're a good citizen, you've already paid taxes on your dividends. Adding them back into your cost basis ensures that you're not taxed twice. If you don't want to sell all your shares at once, there are other ways to determine your cost basis. Using this method, you treat the first shares you bought as the first shares sold. Selling shares One of the downsides to direct investing is the lack of control over exactly when your shares are sold.
Some companies require written notification, for example.
And as John and Kristina Vinson learned, a couple of weeks can make a difference. Four years ago, they decided to sell some shares to raise money for a down payment on a home. Not long after they sent in their order, the stock market went into a tailspin. The market came back - after their shares had been sold. Last summer, the Vinsons decided to sell some additional shares.