Cost basis

[Girard Van De Lay]

I have a client with the sale of mutual funds and has no cost basis for the majority of the sale. He called the co. and they told him that he could use some sort of IRS average for the shares purchased prior to 12/31/1993. Does anyone have any experience in this area or some advice as where to look?

Thanks in advance


Girard

[Luis Mopeo]

I have a client with the sale of mutual funds and has no cost basis for the majority of the sale. He called the co. and they told him that he could use some sort of IRS average for the shares purchased prior to 12/31/1993. Does anyone have any experience in this area or some advice as where to look?

Thanks in advance


Girard

Go to "Links" above, then "Stock Market Links." You can get historical stock quotes. You'll need to know the dates purchased.

[Bird Legs]

basis-Mutual Funds

Do not forget the reinvested dividends.

[JCH]

basis research

Don't forget to charge your client for your time researching his basis issues.

[Black Bart]

Dear Girard,

...
...client...mutual funds...no cost basis...where to look?

Just curious, but do you have a salesman named George Costanza on your staff?

Now, about that cost: First, ask the client to look in both the usual places (ceiling and floor) on the off chance that he may find it there. Altough some obliging companies print cost on the annual composite form, many do not and apparently this company's one of them -- passing the buck with that "IRS average" story. Sooo...it's back to the clueless client who lost most of the records years ago, but is certain that "I lost money on the deal" (show me the recordless client who ever made any profit on his 401 stock and I'll show you a saint worthy of immediate canonization). As far as "dates purchased" they were probably bought 3/10 of a share per week over the last 25 years which brings the magnitude of the job into sharp focus.

If he has any papers at all, you could add up an average purchase price for each of the 12 months and divide. For the years you don't, I guess it's over to Luis' "historical quotes." For a great many stocks, the dividend reinvestment is a nominal amount and you can draw your own conclusions on what to do about that.



"People ask me, how do you do a marathon? I answer, one mile at a time." -- Marathon runner -- New York Times.

[jainen]

one of the prerequisites

>>I'll show you a saint worthy of immediate canonization<<

It doesn't work that way, Black Bart. Even the best ones (well, all except Mother Teresa, but she didn't really do that much on the stock market) have to work up through the ranks -- venerable, beatified... there have to be proven miracles and public hearings and all. It takes years, and the filing fees would kill you except that's already one of the prerequisites.

[Black Bart]

Sainthood

>>I'll show you a saint worthy of immediate canonization<<

It doesn't work that way, Black Bart. Even the best ones (well, all except Mother Teresa, but she didn't really do that much on the stock market) have to work up through the ranks -- venerable, beatified... there have to be proven miracles and public hearings and all. It takes years, and the filing fees would kill you except that's already one of the prerequisites.

You're an expert on that too? Makes me want to get personal about it, but I shall refrain and restrain myself. By the way, did you get a chance to read my personal apology to you in the late, great "Mad Tax Preparer" thread back on page two? I wanted to make sure I get credit for it, so I'm bringing it back up top, but don't go back past my post or you're liable to start a fuss all over again.

[jainen]

other women

>>You're an expert on that too?<<

Actually, I had to call my wife on that one. She got mad at me and told me I was supposed to be doing taxes. Just by coincidence, that's exactly what our fearless moderator said in above-referenced thread. I noticed somebody else took it to heart, but I kept up the good work, whistling Dixie all the while.

In the end I had to Google it, which is where I got that little tidbit about M. Teresa being on the fast track. My wife never tells me about other women.

[OldJack]

I have a client with the sale of mutual funds and has no cost basis for the majority of the sale.

Well... I will state the obvious, the averaging method for cost is actually just that.. an average cost.

example:
client purchased 100 shares of ABZ corp for $100.
ABZ corp paid $2 dividend and reinvested (purchased) 1 share at $2
Client now owns 101 shares at total cost of $102.
Average cost per share is now $1.009901 or $1.01

Client sold 10 shares @ $3 = $30.00
Average cost 10 shares = $10.10
Gain on Sch-D = $19.90

As you can see you MUST know all purchases (reinvestments) of shares owned by the client in order to calculate average cost.