Calculating Complicated Cost Basis
March 28, 2007 7:54 AM Subscribe
How the heck do I figure out the cost basis of long-ago inherited stocks?
So I sold some stock to pay my 2006 taxes, and now I'm pre-worrying about my 2007 taxes. I inherited some stocks from my grandfather in 1999 and have no idea in the world what he paid for them originally. Most of them have split or reverse-split or spun off or turned into/been bought by other companies ($20 mandatory reorg fee every effin' time, grr) at least once in the time I've owned them.
He gifted one of them to me while he was alive but I only have a little bit of that one left (Summit Bank, which became Fleet Bank, which became Bank of America...and I sold some but not all of it back in 1999.)
The rest of them were inherited when he died. The specific one I sold today was Pepco Holdings (POM) which was something else when I got it and was probably something else entirely when he bought it.
What information do I need exactly to figure all this out? I have tried talking to his broker but he was absolutely unhelpful.
Is there a site that will help me figure out cost basis for companies that have split and transformed so many times? Do I try to look up what each share of the original stocks were worth on the day he died? And then calculate how many shares that is worth today after splits and reorgs? The high price or the low price for that day? Or some other date?
Is cost basis stated per share or per lot?
I just want to get this right in Quicken once and for all, if it's possible.
So I sold some stock to pay my 2006 taxes, and now I'm pre-worrying about my 2007 taxes. I inherited some stocks from my grandfather in 1999 and have no idea in the world what he paid for them originally. Most of them have split or reverse-split or spun off or turned into/been bought by other companies ($20 mandatory reorg fee every effin' time, grr) at least once in the time I've owned them.
He gifted one of them to me while he was alive but I only have a little bit of that one left (Summit Bank, which became Fleet Bank, which became Bank of America...and I sold some but not all of it back in 1999.)
The rest of them were inherited when he died. The specific one I sold today was Pepco Holdings (POM) which was something else when I got it and was probably something else entirely when he bought it.
What information do I need exactly to figure all this out? I have tried talking to his broker but he was absolutely unhelpful.
Is there a site that will help me figure out cost basis for companies that have split and transformed so many times? Do I try to look up what each share of the original stocks were worth on the day he died? And then calculate how many shares that is worth today after splits and reorgs? The high price or the low price for that day? Or some other date?
Is cost basis stated per share or per lot?
I just want to get this right in Quicken once and for all, if it's possible.
Cost basis can be tracked for specific shares, or on an average cost basis (for the whole lot). Generally, the latter will be easier if you don't have good records. And for tax purposes, you can just subtract the cost of the whole lot from your sale proceeds to get your gain.
For stocks that you inherited, you don't need to find out what grandpa paid - your cost basis is the stock's value when you inherited it. If he gave it to you while living, then he also gave you his cost basis. Yahoo! Finance will give you historical prices - here's Pepco. You can also go to the corporate website and click on the "investor relations" link. There you'll find historical prices, and often a worksheet to help you track splits and mergers.
It doesn't matter how many times since then the stock has split or merged - if you sell the whole holding, the cost basis is the whole original value. If you've sold some before, and sold the rest now, the basis for the part you sold now is simply the original basis of the whole bunch, minus whatever you figured out the first time you sold.
If you don't know the precise date of a purchase, take the closing value on the first and last day of the year and average them.
You're right that once you get this into Quicken, Quicken will do all the math for you.
posted by teaperson at 8:21 AM on March 28, 2007 [2 favorites]
For stocks that you inherited, you don't need to find out what grandpa paid - your cost basis is the stock's value when you inherited it. If he gave it to you while living, then he also gave you his cost basis. Yahoo! Finance will give you historical prices - here's Pepco. You can also go to the corporate website and click on the "investor relations" link. There you'll find historical prices, and often a worksheet to help you track splits and mergers.
It doesn't matter how many times since then the stock has split or merged - if you sell the whole holding, the cost basis is the whole original value. If you've sold some before, and sold the rest now, the basis for the part you sold now is simply the original basis of the whole bunch, minus whatever you figured out the first time you sold.
If you don't know the precise date of a purchase, take the closing value on the first and last day of the year and average them.
You're right that once you get this into Quicken, Quicken will do all the math for you.
posted by teaperson at 8:21 AM on March 28, 2007 [2 favorites]
Inherited stocks get a new cost basis, which is the stock price on the day of the death (not the day you recieve the inheritance). The price to use is the closing price for the day.
For stocks that were given to you during his lifetime, your cost basis is what he paid. I haven't any idea what to do when you don't even know the year he bought them, other than to take a wild guess and cross your fingers.
You don't have to go to an accountant, they won't know when he bought them either.
posted by yohko at 8:36 AM on March 28, 2007
For stocks that were given to you during his lifetime, your cost basis is what he paid. I haven't any idea what to do when you don't even know the year he bought them, other than to take a wild guess and cross your fingers.
You don't have to go to an accountant, they won't know when he bought them either.
posted by yohko at 8:36 AM on March 28, 2007
Teaperson and yohko are right. The cost basis will be the marked-to-market price. Your clearing firm should have already marked them to market at the time of the transfer.
posted by mckenney at 7:34 PM on March 28, 2007
posted by mckenney at 7:34 PM on March 28, 2007
Response by poster: Ok, thank you all very much. I will go look up the historical prices for the number and name of the stocks on the day he died, and make Quicken deal with the changes since then.
Thanks again. I've waited eight years to deal with this; it's a real relief to finally make it all right.
posted by bink at 6:07 PM on March 29, 2007
Thanks again. I've waited eight years to deal with this; it's a real relief to finally make it all right.
posted by bink at 6:07 PM on March 29, 2007
Response by poster: Hm. Perhaps I spoke too soon.
On the off chance that anyone is still reading this, is there someplace to find historical quotes of stocks that no longer exist? I've been to several historical quotes sites but they only do old quotes for existing stocks.
I still need old prices (specifically, the price on 3/2/00) for
Connectiv (CIV)
Connectiv class A (CIV/A)
First Union bank (FTU)
Lucent Tech (LU)
SBC Communications (SBC)
Summit Bancorp (SUB)
but none of those ticker symbols exist anymore. Now what do I do?
posted by bink at 6:59 PM on March 29, 2007
On the off chance that anyone is still reading this, is there someplace to find historical quotes of stocks that no longer exist? I've been to several historical quotes sites but they only do old quotes for existing stocks.
I still need old prices (specifically, the price on 3/2/00) for
Connectiv (CIV)
Connectiv class A (CIV/A)
First Union bank (FTU)
Lucent Tech (LU)
SBC Communications (SBC)
Summit Bancorp (SUB)
but none of those ticker symbols exist anymore. Now what do I do?
posted by bink at 6:59 PM on March 29, 2007
This thread is closed to new comments.
Second, if you're trying to pinpoint the value of the date for the basis price of the stock, that company's website is usually a good resource.
Typically, you'd go to an accountant, and they would take a good best stab at it. If you haven't sold the whole lot off at once, then you need to start keeping very good records of what you assumed was the basis price for each chunk you sell and the justification for it.
posted by j at 8:18 AM on March 28, 2007