Stock Basis Question

[TaxTime829]

Client has 1099-B for stock sale. The stock was purchased by husband in the 1970's who died in 1982.

Client does not know if the stock was purchased by husband only or by husband & client jointly (Step Up basis?). Can't get original purchase date or price after trying all sources available (Broker (Merrill Lynch... needs acct# to do anything), many online sites, company investment representative, Investment banker who now has the account (says its my problem!), etc)

I do have stock certificate issued to client after husband died... putting stock in name of client and her daughter.

IRS says we need to document stock basis or basis is zero!

Sooo... Can I use the dates on the stock certificates and get the stock price on that date as the basis? This would ignore the original purchase by clients husband nearly 20 years earlier but I have documents to back it up.

Is there a better way to do this whole thing?

[taxmom34]

i am wondering why you are trying to get a basis that husband bought . if spouse received these stocks when he died in 1982 wouldn't it be considered inherited ? and basis would be value at date of death.?

[TaxTime829]

It is my understanding that I can use the "step-up" basis at death only if the stock was owned only by her husband... but if it were owned jointly then I can only step up 50% of the stock... the portion owned by the wife. The basis of the other half would be the original purchase price paid by the husband.

Also I don't have documents showing if the original purchase was only by the husband or if he purchased the stock jointly with his wife.

[Roberts]

I sent you a private message on what I'd do...

Make sure there weren't any spin-offs and if the stock in question is AT&T, just go ahead and tell the client your fee went up by 10 hours if they want you to figure out the cost basis.

[Burke]

Also I don't have documents showing if the original purchase was only by the husband or if he purchased the stock jointly with his wife.

What is the name of the stock? Is it still the same company as it was in the 70's? The company would possibly have the records on ownership showing the transfer into the spouse's name. It's worth a try. You won't be able to find a price online prior to about 20 yrs ago, but they would know. And PS, it is NOT your problem. It's the client's. Either have her do the research or go with 1/2 basis at his DOD (if she can get it). It's the only thing you can confirm. Unless she has her tax returns back to the 70's. You'd be surprised, some people do.

[ddoshan]

What company was it. Just checked yahoo finance for GE and historical prices and information go back to 1962

[JohnH]

I assume you've already run the numbers using zero cost basis for the husband's half and then using any other available r possible number. I've had a few cases where the difference wasn't very much - certainly not worth the cost of my time to chase it down. So then I'd present both scenarios to the client and let them make the decision. As Burke has already pointed out, this is the client's pronblem, not yours. Make that clear to them in dollars and cents

[Y2KEA]

It is my understanding that I can use the "step-up" basis at death only if the stock was owned only by her husband... but if it were owned jointly then I can only step up 50% of the stock... the portion owned by the wife. The basis of the other half would be the original purchase price paid by the husband.

Also I don't have documents showing if the original purchase was only by the husband or if he purchased the stock jointly with his wife.

If surviving spouse resides in a community property state, she gets 100% step up regardless of ownership percentage.