OT: Tax question

[voltz99]

I have a spin-off stock I want to get out of my portfolio. This is a small holding worth about $1000. Original stock had dividend reinvestment and I have had it for 20 years. The main problem is I have no idea how to calculate the cost basis of all the additional shares purchased through dividend reinvestment. I have the paperwork but I would have to go back through 80 quarters.

I would guess the cost is about $200-$400. Can I simply use a cost basis of 0? Using a cost basis of 0, would actually benefit the IRS, so I dont think they should have a problem with it. If I used a cost basis of 0 could I then deduct a loss against the capital gain?

Thanks

 

[Rutgers Chris]

Don’t know the answer but it reminded me of this…

 

[WhichReligionIsRight]

Your should be able to get the cost basis from your broker. Do you use Schwab or Fidelity?

The cost basis should be the share price on the day the stock appeared in your account x the number of shares. You presumably have beeb reporting dividend income to the IRS all along, so should not affect the cost basis.

 

[Zak57]

Anything before 2012 is considered uncovered I believe. Financial firms didn't have to report to IRS. Anytime after is covered.

 

[T2Kplus20]

Don’t know the answer but it reminded me of this…

View embedded media

LOL! Stupid gov'ment.

 

[voltz99]

Your should be able to get the cost basis from your broker. Do you use Schwab or Fidelity?

The cost basis should be the share price on the day the stock appeared in your account x the number of shares. You presumably have beeb reporting dividend income to the IRS all along, so should not affect the cost basis.

No. Problem is I held the certificate on the first two stocks I bought which was a mistake. The broker does not have the purchase price since they we're not holding those share.

I do report dividend income, but that does not give me price per share for the additional shares. That does help though. I would still have to go back 20 years and add all the dividends and divide by total additional shares. That should give me an average share price which is exactly what I need. I think the shares for the last four quarters would be short term and everything else long term.

Thanks.

 

[voltz99]

Anything before 2012 is considered uncovered I believe. Financial firms didn't have to report to IRS. Anytime after is covered.

Sounds about right. My current broker does not list purchase price on my oldest/ longest held stocks.

 

[T2Kplus20]

Sounds about right. My current broker does not list purchase price on my oldest/ longest held stocks.

And remember the most important lesson for taxes.....stiff the gov'ment for as much as possible and as long as possible especially since you can now make 5% on cash.

Our tax bill was massive this year. LOL! Next year will be even bigger. :)

 

[BossNJ]

Sounds about right. My current broker does not list purchase price on my oldest/ longest held stocks.

Estimate, you’ll be fine. Your gain is not big enough for anyone to lose sleep over.

 

[BossNJ]

And remember the most important lesson for taxes.....stiff the gov'ment for as much as possible and as long as possible especially since you can now make 5% on cash.

Our tax bill was massive this year. LOL! Next year will be even bigger. :)

The 5+% I earn is great but the resulting tax bill is not.

 

[chase_NJ]

Reasonable estimate is fine. If you can't reasonably estimate or don't feel comfortable doing so, just use $0 cost basis. No one's going to care given how small the gain is.

 

[voltz99]

Reasonable estimate is fine. If you can't reasonably estimate or don't feel comfortable doing so, just use $0 cost basis. No one's going to care given how small the gain is.

Thay can't complain about that part since it benefits the IRS.

Can I still deduct a capital loss against the gain?

 

[WhichReligionIsRight]

Thay can't complain about that part since it benefits the IRS.

Can I still deduct a capital loss against the gain?

Yes. Tax loss harvesting can be a good idea to reduce your tax burden from capital gains.

 

[WhichReligionIsRight]

No. Problem is I held the certificate on the first two stocks I bought which was a mistake. The broker does not have the purchase price since they we're not holding those share.

I do report dividend income, but that does not give me price per share for the additional shares. That does help though. I would still have to go back 20 years and add all the dividends and divide by total additional shares. That should give me an average share price which is exactly what I need. I think the shares for the last four quarters would be short term and everything else long term.

Thanks.

Is it a public company? What is the ticker? It would be easy enough to look up the price of a stock at any given date.

 

[mdk01]

Is it a public company? What is the ticker? It would be easy enough to look up the price of a stock at any given date.

I think his problem is it was a DRIP plan and he got quarterly dividend payments for 20 years

 

[WhichReligionIsRight]

I think his problem is it was a

 

[mdk01]

Fat finger - GUILTY!

 

[WhichReligionIsRight]

I think his problem is it was a DRIP plan and he got quarterly dividend payments for 20 years

Oh. I see. Thanks. That's a stumper.

 

[jtung230]

IRS don’t waste time on small fish. If your tax rate corresponds to your income, you are safe.

 

[voltz99]

Is it a public company? What is the ticker? It would be easy enough to look up the price of a stock at any given date.

Yes it is public. It is not one given date. It is 80+ dates since additional shares are bought each quarter over 20 years with dividend reinvestment. The second variable is the exact amount of shares bought each quarter. I think it is probably simple if I had the docs sitting in front of me but I dont. I would like to just use a cost basis of 0 for the spinoff and then offset a small gain with a capital loss.

 

[mdk01]

Yes it is public. It is not one given date. It is 80+ dates since additional shares are bought each quarter over 20 years with dividend reinvestment. The second variable is the exact amount of shares bought each quarter. I think it is probably simple if I had the docs sitting in front of me but I dont. I would like to just use a cost basis of 0 for the spinoff and then offset a small gain with a capital loss.

Obviously 0 is less than the actual basis. I don't think you can get into trouble for overpaying your taxes. If the capital loss wasn't used this year it would be carried over to 2024 (except for NJ)

 

[voltz99]

Obviously 0 is less than the actual basis. I don't think you can get into trouble for overpaying your taxes. If the capital loss wasn't used this year it would be carried over to 2024 (except for NJ)

Can I use the capital loss against that gain after I used a 0 cost basis?

 

[mdk01]

Can I use the capital loss against that gain after I used a 0 cost basis?

Why not? You sold securities for a gain and you sold securities at a loss.

 

[WhichReligionIsRight]

Can I use the capital loss against that gain after I used a 0 cost basis?

Short answer: Yes

Longer answer: I suggest using the Investopedia search box for a few terms. I think reading these will help you get more comfortable on how to best proceed.

How to Deduct Stock Losses From Your Tax Bill

Learn the proper procedure for deducting investment losses and get some tips on how to strategically structure them to lower your income tax bill for the year.

www.investopedia.com

 

[DennisHajekRC84]

This seems extremely trivial. Can't you just calculate the dividends you earned and then just use a cost average for all those years?
It ought to get you reasonable close and pass any half witted audit IF by God some IRS moron actually spent any time on this.

You already know what the Cap Gain is on the original holding so determining the rest should be pretty straight forward unless you want to spend hours on Penny's.