Knew it Would Happen

[taxitc]

Client came in today with a 1099-B showing the sale of stock to the tune of $97,000.
When asked about her cost basis, she says "I haven't a clue". She bought the first share
back in 1960 and has re-invested all the dividends since then. What the "heck" does one do? Won't be the last one to deal with.

[ChEAr$]

Client came in today with a 1099-B showing the sale of stock to the tune of $97,000.
When asked about her cost basis, she says "I haven't a clue". She bought the first share
back in 1960 and has re-invested all the dividends since then. What the "heck" does one do? Won't be the last one to deal with.

First, she needs to contact investor relations for the company to get a print out of activity as far back as possible.
Next, examine all of her tax returns since 1960 for information on dividends reinvested.

That's a start.

[taxitc]

First suggestion is possible-hopefull- Five returns back can be done.
Any other ideas?

[KBTS]

Remind her that unless she can show otherwise, her basis will be $0. She is responsible for the information - don't let her problem turn into your problem. Know this can be hard to do, but she needs to do the work on this.

[RitaB]

You could try

Client came in today with a 1099-B showing the sale of stock to the tune of $97,000.
When asked about her cost basis, she says "I haven't a clue". She bought the first share
back in 1960 and has re-invested all the dividends since then. What the "heck" does one do? Won't be the last one to deal with.

If you know all her purchases, and dates (yeah, I can't believe I said that, either), you could try Morningstar.com (or another site for investors). You can create a portfolio on there that will keep track of all the reinvestments if you enter purchases and dates. Not sure if they can handle back there to Pre-Woodstock. Obviously, I'd only do this for a pretty penny.

Otherwise, I'd just hold her feet to the fire to get me a basis. I think they did that at Woodstock, BTW.

Here's another thought (after I just said what I'd do): Enter everything and see what the tax is with no basis. Might not be bad at all.

[taxitc]

Went back 7 years (Drake)- Re-invested div. total $19548.
Stock has split b/4. Why the he** she sold it, I don't know. Not my business, but I wonder.

[Gary2]

The last time I did one that went back that far, the basis was negligible compared to the proceeds.

[RitaB]

My guy

Went back 7 years (Drake)- Re-invested div. total $19548.
Stock has split b/4. Why the he** she sold it, I don't know. Not my business, but I wonder.

Had a guy that watched some stock he had go from 13,000 to 300. THEN he sold it. He really did not get that part about "buy low, sell high".

[JohnH]

Had a guy that watched some stock he had go from 13,000 to 300. THEN he sold it. He really did not get that part about "buy low, sell high".

Investing advice:
Take all your savings put it all in one company's stock.
When it goes up, sell it and make a fortune.
If it isn't going to go up, don't buy it in the first place.

[Bees Knees]

Went back 7 years (Drake)- Re-invested div. total $19548.

I would tell the client we can prove $19,548 basis. If you can't prove anymore, that's the number we can use.

Put the burden on your client to prove basis. There are numerous court cases that have ruled without proof, basis is zero.

[joanmcq]

Check the company's investor relations website. They may have a calculator for which you can plug in the initial investment (if she remembers that) and it'll calculate basis with stock splits, dividends, spin-offs, etc. Might help if we knew what stock it was. The investment firm may have info/statements/1099s going back farther. Just because they didn't report the basis, doesn't mean they don't have more info for you. Especially with regard to the divvies paid to her over the years.

And charge her! I did a cost basis reconstruction spreadsheet for a client going back to purchase, and since she hadn't sold all the shares (mutual fund no less), now have an ongoing record to calculate shares in the future.

[KathMorgan]

A hope.......

What is her other taxable income? If she is in the 10 or 15% bracket her LTCG will be at 0% anyway this year won't they? So if that is the case, go ahead and put 0$ as the basis. Makes no difference unless it effects taxable SS or something like that. I know it's a slim hope, but I actually have an elderly client that this happened to last year and we just put $0 for her basis $150K+ gain. Made absolutley no difference in the end and saved all of us a large headache.

[taxitc]

Check the company's investor relations website. They may have a calculator for which you can plug in the initial investment (if she remembers that) and it'll calculate basis with stock splits, dividends, spin-offs, etc. Might help if we knew what stock it was. The investment firm may have info/statements/1099s going back farther. Just because they didn't report the basis, doesn't mean they don't have more info for you. Especially with regard to the divvies paid to her over the years.

And charge her! I did a cost basis reconstruction spreadsheet for a client going back to purchase, and since she hadn't sold all the shares (mutual fund no less), now have an ongoing record to calculate shares in the future.

The stock was Raytheon. Raytheon bought out the old "Beech" a/c stock sometime back.
I don't charge extra usually. I take the good with the bad.

[taxitc]

What is her other taxable income? If she is in the 10 or 15% bracket her LTCG will be at 0% anyway this year won't they? So if that is the case, go ahead and put 0$ as the basis. Makes no difference unless it effects taxable SS or something like that. I know it's a slim hope, but I actually have an elderly client that this happened to last year and we just put $0 for her basis $150K+ gain. Made absolutley no difference in the end and saved all of us a large headache.

I know what you mean. I can't get "anything" to flow to the "taxed at the 0% line". My first thought too. I let the software do the calc. (Drake). I don't really understand the computation.
I played around with her income and got it to tax some at 0%. She is single. The single 34,500. gives her nothing. ???/

[Burke]

Basically, it is this. Figure the tax without the capital gain and any qualified dividends. Then, see what bracket she is in. That determines what rate applies on the QD&CGTW. She may straddle brackets.