A Stock Mystery

[Larmil]

Update

[QUOTE=HiltonL;78079]I like this topic, it's very interesting.

I believe in Larmil's Wrigley case, I would be forced to use zero as a basis. Given the facts of original basis being "decades ago" any actual basis would be minute. Even if the TP did pay for the research, the difference in tax might be 15% of a thousand or two, so $300? How much cost do we want to incur to get that last % of accuracy?

I have talked to the client again. He had done considerable research and agrees the Cohan Rule would save him little. He was prepared at the outset to use a zero basis.

[luke]

no basis known

I cannot believe that so many of you go to so much trouble to find the basis for your clients. I thought that is why they paid their broker his big fat commission, to keep track of basis etc? I always explain to my clients that I have NO WAY of finding their basis!

[David1980]

I cannot believe that so many of you go to so much trouble to find the basis for your clients. I thought that is why they paid their broker his big fat commission, to keep track of basis etc? I always explain to my clients that I have NO WAY of finding their basis!

Well, everyone tries to vary their service a bit to offer more for the money. I'm with you on stock basis, and am happy to preparer a schedule D with $0 basis "various" short-term gain to scare them into getting that info, primarily because it seems like such an impossible task for me whereas the taxpayer either has the records or is more likely to be able to get them.

But I see how others would be willing to do more than me. After all, if this profession ever is reduced to data entry we're going to have the choice of either taking data entry salary, or getting a new job.

[FEDUKE404]

Taxes are more than filling out forms...

I cannot believe that so many of you go to so much trouble to find the basis for your clients. I thought that is why they paid their broker his big fat commission, to keep track of basis etc? I always explain to my clients that I have NO WAY of finding their basis!

It's not always the broker. Many people in the Scottrade/Ameritrade world of today do not even HAVE a full-service broker! Also consider a person who has for many years been in a DRIP program for a utility (yes, years ago there was even a tax incentive for participating!).

My clients appreciate the service, which goes under billable hours separate from any "tax preparation" work. I suggest they get such items to me in the off season, to cut their overall costs. The burden is also upon them to procure the necessary documents for older information.

I perform a similar service by working through the mazes of spin-offs and reorganizations.

Just different strokes for different tax folks, I guess!

FE

[DTS]

Finding basis

I cannot believe that so many of you go to so much trouble to find the basis for your clients. I thought that is why they paid their broker his big fat commission, to keep track of basis etc? I always explain to my clients that I have NO WAY of finding their basis!

I knew this older preparer (notice I did not say "old" out of respect for so many !) that told me of two audits he was on that involved some complicated basis calculations. The calcs were not 100% accurate, but the auditors could see he did his best to arrive at the correct figures. Because of the "effort" the preparer took to be accurate, auditors went with the calcs he presented.

I was thinking of this fellow today and I guess that's why I spent 45-50 minutes online today trying to look up an obscure share price for my client that inherited only 115shs of stock.

D

[Larmil]

It's not always the broker. Many people in the Scottrade/Ameritrade world of today do not even HAVE a full-service broker! Also consider a person who has for many years been in a DRIP program for a utility (yes, years ago there was even a tax incentive for participating!).

My clients appreciate the service, which goes under billable hours separate from any "tax preparation" work. I suggest they get such items to me in the off season, to cut their overall costs. The burden is also upon them to procure the necessary documents for older information.

I perform a similar service by working through the mazes of spin-offs and reorganizations.

Just different strokes for different tax folks, I guess!

FE

Personally I do not sell any kind of product. Service is all I have to offer. However, I have warned my clients who have pre-divesture AT&T stock with DRIP's to to wait until I retire to sell them.

[DonPriebe]

However, I have warned my clients who have pre-divesture AT&T stock with DRIP's to to wait until I retire to sell them.

I don't have the cite handy, but I thought that anyone who held any of the original AT&T or the baby-Bells was required to hold them until death, and even then had to arrange their affairs such that no Estate Tax return was required.

[It may have been the Preservation of Tax Preparer Sanity Act of 2003 ... ]

[FEDUKE404]

Ma Bell ordeals

I don't have the cite handy, but I thought that anyone who held any of the original AT&T or the baby-Bells was required to hold them until death, and even then had to arrange their affairs such that no Estate Tax return was required.

[It may have been the Preservation of Tax Preparer Sanity Act of 2003 ... ]

In the FYI category: There was a very nice piece of software called "Tax Calculator for AT&T" (C Carlson) that would handle all scenarios for T stock and its children, whether bought pre-divestitute or post same. You plugged in whatever Ma Bell stock(s) you bought and when, and it would tell you what has been procreated (number of shares and cost basis of each). The product was updated annually, but stopped with the 2005 edition.

It has saved my tail more than once, and just having to figure out what happened from 2006 onward simplifies a lot of the dreaded calculations.

I'm sure it is Google-able.

FE

[Lion]

At&t

The AT&T site had all the worksheets for free. Plug in dates and amounts or number of shares. Or start from how many shares now and work backwards. However, if your little old widow or someone who inherited stock doesn't know when it was purchased.... That's often the case if daddy worked for NY Bell and bought via payroll deduction and willed his stock to sonny. Although, I've had clients get records from payroll when the original owner was an employee.

[FEDUKE404]

Still like the AT&T software

The AT&T site had all the worksheets for free. Plug in dates and amounts or number of shares. Or start from how many shares now and work backwards. However, if your little old widow or someone who inherited stock doesn't know when it was purchased.... That's often the case if daddy worked for NY Bell and bought via payroll deduction and willed his stock to sonny. Although, I've had clients get records from payroll when the original owner was an employee.

True, but it only covers the actual "AT&T" issues. Many of the Baby Bells spun-off later disappeared, reorganized, and much more hence the worth of the software which can track, for instance, what happened to Verizon stock that was bought in 1991. Ever heard of Fairpoint Communications, as an example?

Also, for the lazy tax preparer, the calculations are completely handled by the software. Generally, you just enter "bought x shares for $y on z date, sold (something) on a later date, and then hit the print button.

Actually, it's the best $30 or so I ever spent!!

FE

[Larmil]

True, but it only covers the actual "AT&T" issues. Many of the Baby Bells spun-off later disappeared, reorganized, and much more hence the worth of the software which can track, for instance, what happened to Verizon stock that was bought in 1991. Ever heard of Fairpoint Communications, as an example?

Also, for the lazy tax preparer, the calculations are completely handled by the software. Generally, you just enter "bought x shares for $y on z date, sold (something) on a later date, and then hit the print button.

Actually, it's the best $30 or so I ever spent!!

FE

I have a client now who sold $25 worth of Fairpoint. I have no clue what he has in it. Maybe Carlson died like Judge Greene.

[TaxLadyinPA]

Another historical place to look

Is this what your're looking for--this is the web site I use for historical quote

http://bigcharts.marketwatch.com/historical/

Here is another place to look up historical info

http://www.morningstar.com/Cover/Stocks.html

Scroll down to Stocks, write in Ticker and drop down menu where it says *select chart* choose price and you will see prices that will go back as far as you can go.
It sure has been my life saver this year ..... I had one client who received a huge amount from the sale of Anheuser Busch. She was missing some of her basis for a period of time in the 1970's and 1980's. I was able to at least get an average cost for her couple missing years. Every little bit of basis helps when you are working with a huge $$.
I didn't know about bigcharts so I appreciate that link too.

[Lion]

All those Baby Bells and...

The AT&T site took my clients' investments through all the various iterations. Even the retired NY Bell client who bought stock through 40 years; we knew how much he had now of which entities and which years he was buying. I worked it forwards and backwards and was within a couple of shares of where he really stood. He spent the same dollar amount each pay check, and that was an option it gave me. I was so happy to get information so easily.