Is Reinvesting Dividends a Good Thing?

When you sell a stock you have to know your cost basis which is the original cost of the stock including reinvested dividends. Otherwise you can't calculate properly the gain or loss on the sale of the stock for your tax return.  If you've been with the same full service broker since you first bought the stock, you will have the cost basis information and everything will be fine. How many people though never change brokers or for that matter always use a full service broker?  Not knowing the full cost basis can cost you money on your tax return since your basis might be too low. The IRS assumes basis is zero if you can't prove it.