Stock price basis
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From: Stubby on 16 Dec 2009 08:18 I inherited stock in 1983. Mostly, I have let the the dividends reinvest for all this time. However I didn't start using Quicken until the late 1980s. Now I want to determine the basis price for the stock(s) in a way that will stand up to an IRS audit if necessary. The data available on the current transfer agent's web site doesn't go back this far. Can anyone tell me how to do this? TIA.
From: Arnie Goetchius on 16 Dec 2009 08:48 Stubby wrote: > I inherited stock in 1983. Mostly, I have let the the dividends > reinvest for all this time. However I didn't start using Quicken > until the late 1980s. Now I want to determine the basis price for the > stock(s) in a way that will stand up to an IRS audit if necessary. > The data available on the current transfer agent's web site doesn't go > back this far. Can anyone tell me how to do this? TIA. Try this: http://finance.yahoo.com/q/hp?s=GE and substitute your stock symbol for "GE"
From: R. C. White on 16 Dec 2009 12:22 Hi, Bill. Start at the beginning: The date of death of the decedent from whom you inherited the stock. That MIGHT be 1983 when you inherited the stock - or not. Assets "acquired from a decedent" are valued at date of death (with a few exceptions, which I will ignore for now but are very significant when they apply). The stock acquires a new basis ("basis for determining gain or loss, or for depreciation") equal to the Fair Market Value (FMV) on the Date of Death (DOD). This new basis becomes the "uniform basis" that persists through any changes of ownership until it actually reaches the heir. So, if it takes months or years to settle the estate, and then the stock goes into a trust for years (until death of the surviving spouse, for example), and finally to the heirs, the stock keeps its same basis through all those transitions. So, if your decedent died in 1970 but you didn't get the shares until 1983, you still will need to know the 1970 value and the history since then. The executor (and trustee?) should be able to furnish this information. Was a Form 706, Estate Tax Return, filed for the estate; if so, that provides the starting point because it would have listed the stock at its DOD value. Then, I'm sorry to say, the tedious work begins. Since the dividends were reinvested, you will need to know the date each dividend was paid, the amount of the dividend, and the number of full and/or partial shares acquired with each separate dividend. Each lot of shares will have its own basis and its own acquisition date. Just as with shares purchased with cash, the price per share is almost irrelevant; the number of shares and the total cost of each lot are what matter. The list at the URL Arnie supplied can be a big help in calculating the basis if you don't have records, but your actual dividends and reinvestments are what actually govern. Again, if the DOD was in 1970, that's when the historical record must begin, not necessarily on the later date when you actually received the shares. When the stock is sold, in whole or in part, each lot must be reported separately. List them, line by line, and divide the short-term from long-term gains and losses on Schedule D of your own Form 1040. The inherited shares are clearly long-term, but if shares bought with a recent dividend are included, some of those will probably be classified as short term. You can, if you like, group them all into a couple of lines (LT and ST), but be sure to have the backup detailed listing in case the auditor asks for it. If any shares were sold in prior years, you must identify WHICH shares were sold, or use the FIFO method, starting with the shares held by the decedent at DOD. If they were identified and reported incorrectly, you might need to file amended returns for any "open" years. There is a break for inherited assets sold after the death that lets gain from them be treated as long-term even if they are sold within a few days, but for a death in 1983 (or before), that period is long expired; the DOD governs even if you didn't get the shares from the executor or trustee until recently. Summary: Stock held by the decedent at date of death: DOD FMV and holding period. Shares received by reinvesting dividends since DOD, whether by you or by an intervening executor or trustee: Cost of shares purchased with each separate dividend, holding periods start on each dividend date. Remember that I've been retired for nearly 20 years and these rules change often. The rules may not be as I remember them. Be sure to discuss this with your own CPA - and the executor's CPA if necessary - before filing your return, Bill. RC -- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) rc(a)grandecom.net Microsoft Windows MVP (Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64) "Stubby" <William.Plummer(a)alum.mit.edu> wrote in message news:59b3e292-0baf-45ed-8683-4c67ced977f5(a)p19g2000vbq.googlegroups.com... > I inherited stock in 1983. Mostly, I have let the the dividends > reinvest for all this time. However I didn't start using Quicken > until the late 1980s. Now I want to determine the basis price for the > stock(s) in a way that will stand up to an IRS audit if necessary. > The data available on the current transfer agent's web site doesn't go > back this far. Can anyone tell me how to do this? TIA.
From: Stubby on 17 Dec 2009 08:56 On Dec 16, 8:48 am, Arnie Goetchius <arnie.goetch...(a)invalid.domain> wrote: > Stubby wrote: > > I inherited stock in 1983. Mostly, I have let the the dividends > > reinvest for all this time. However I didn't start using Quicken > > until the late 1980s. Now I want to determine the basis price for the > > stock(s) in a way that will stand up to an IRS audit if necessary. > > The data available on the current transfer agent's web site doesn't go > > back this far. Can anyone tell me how to do this? TIA. > > Try this: > > http://finance.yahoo.com/q/hp?s=GE > > and substitute your stock symbol for "GE" Thanks, Arnie. Unfortunately the data it provides doesn't go back to 1983. Try it on "FE" and you'll see. But that site will come in handy for getting the history of stock straightened out. Now if Quicken could only provide a table of price vs time.
From: Stubby on 17 Dec 2009 08:59
On Dec 16, 12:22 pm, "R. C. White" <r...(a)grandecom.net> wrote: > Hi, Bill. > > Start at the beginning: The date of death of the decedent from whom you > inherited the stock. > > That MIGHT be 1983 when you inherited the stock - or not. Assets "acquired > from a decedent" are valued at date of death (with a few exceptions, which I > will ignore for now but are very significant when they apply). The stock > acquires a new basis ("basis for determining gain or loss, or for > depreciation") equal to the Fair Market Value (FMV) on the Date of Death > (DOD). This new basis becomes the "uniform basis" that persists through any > changes of ownership until it actually reaches the heir. So, if it takes > months or years to settle the estate, and then the stock goes into a trust > for years (until death of the surviving spouse, for example), and finally to > the heirs, the stock keeps its same basis through all those transitions. > > So, if your decedent died in 1970 but you didn't get the shares until 1983, > you still will need to know the 1970 value and the history since then. The > executor (and trustee?) should be able to furnish this information. Was a > Form 706, Estate Tax Return, filed for the estate; if so, that provides the > starting point because it would have listed the stock at its DOD value. > > Then, I'm sorry to say, the tedious work begins. Since the dividends were > reinvested, you will need to know the date each dividend was paid, the > amount of the dividend, and the number of full and/or partial shares > acquired with each separate dividend. Each lot of shares will have its own > basis and its own acquisition date. Just as with shares purchased with > cash, the price per share is almost irrelevant; the number of shares and the > total cost of each lot are what matter. The list at the URL Arnie supplied > can be a big help in calculating the basis if you don't have records, but > your actual dividends and reinvestments are what actually govern. Again, if > the DOD was in 1970, that's when the historical record must begin, not > necessarily on the later date when you actually received the shares. > > When the stock is sold, in whole or in part, each lot must be reported > separately. List them, line by line, and divide the short-term from > long-term gains and losses on Schedule D of your own Form 1040. The > inherited shares are clearly long-term, but if shares bought with a recent > dividend are included, some of those will probably be classified as short > term. You can, if you like, group them all into a couple of lines (LT and > ST), but be sure to have the backup detailed listing in case the auditor > asks for it. > > If any shares were sold in prior years, you must identify WHICH shares were > sold, or use the FIFO method, starting with the shares held by the decedent > at DOD. If they were identified and reported incorrectly, you might need to > file amended returns for any "open" years. > > There is a break for inherited assets sold after the death that lets gain > from them be treated as long-term even if they are sold within a few days, > but for a death in 1983 (or before), that period is long expired; the DOD > governs even if you didn't get the shares from the executor or trustee until > recently. > > Summary: > Stock held by the decedent at date of death: DOD FMV and holding period. > Shares received by reinvesting dividends since DOD, whether by you or by an > intervening executor or trustee: Cost of shares purchased with each > separate dividend, holding periods start on each dividend date. > > Remember that I've been retired for nearly 20 years and these rules change > often. The rules may not be as I remember them. Be sure to discuss this > with your own CPA - and the executor's CPA if necessary - before filing your > return, Bill. > > RC > -- > R. C. White, CPA > San Marcos, TX > (Retired. No longer licensed to practice public accounting.) > r...(a)grandecom.net > Microsoft Windows MVP > (Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64) > > "Stubby" <William.Plum...(a)alum.mit.edu> wrote in message > > news:59b3e292-0baf-45ed-8683-4c67ced977f5(a)p19g2000vbq.googlegroups.com... > > > > > I inherited stock in 1983. Mostly, I have let the the dividends > > reinvest for all this time. However I didn't start using Quicken > > until the late 1980s. Now I want to determine the basis price for the > > stock(s) in a way that will stand up to an IRS audit if necessary. > > The data available on the current transfer agent's web site doesn't go > > back this far. Can anyone tell me how to do this? TIA.- Hide quoted text - > > - Show quoted text - RC comes through again! You confirmed that I'm going to have to put some elbow grease into it. |