How to determine the cost basis for stocks with no records? (2024)

BHs:

I am in possession of some stocks for which I don't have the cost basis or the transaction history. I purchased these around early 2000 (around 2001 or 2002).

I don't recall when I purchased or what I price paid. That is the problem here. No records whatsoever.

I would like to sell them now. How do I ascertain their cost basis?

I am just trying to do some TLH before the end of the year.

TIA.

did you switch brokers so they can't tell you?

do you have paper stock certificates? would they have any date on them?

can you ask the selling broker to research it for you?

what's the difference between historical high and low prices in the dates you think you purchased it (between 2000-2002)?

If you have no records you can always use a cost basis of zero and the IRS will likely accept it.

Generally brokers were required to maintain records of stocks purchased 1/1/2011 or later (covered shares). All ETFs were covered by 1/1/2012.

arcticpineapplecorp. wrote: ↑Mon Dec 11, 2023 4:10 pmdid you switch brokers so they can't tell you?

do you have paper stock certificates? would they have any date on them?

can you ask the selling broker to research it for you?

what's the difference between historical high and low prices in the dates you think you purchased it (between 2000-2002)?

Thanks. Unfortunately, I don't have paper certificates and I may have transferred them over from another institution (that is my guess). I don't even recall which broker I used. This was a time in my life when I didn't have any time to pay attention and was financially naive and didn't have a clue.

The stocks are well known names and that is the irony. Microsoft, Intel, Qualcomm, GE, Oracle and Cisco. But I failed to maintain records.

123 wrote: ↑Mon Dec 11, 2023 4:14 pmIf you have no records you can always use a cost basis of zero and the IRS will likely accept it.

Thanks, but this is going to sting from a tax perspective. I was advised a DAF by the current custodian which I need to look into.

I'm in the same boat and have several small lots for which I can't find any cost information. Some were inherited pursuant to the distribution of a trust, others were spinoffs of other holdings for which I lack cost basis.

Some of these parcels have acquisition dates going back forty years or more. I realize that the IRS would be more than happy to let me use a cost basis of $0 and let me "pay my fair share." However, I'm a cheap SOB and don't care to pay a nickel in tax more than necessary.

I have three plans to deal with these missing cost basis lots:

1.) My 25 year old daughter recently graduated from University and has a very small income. She could sell some shares that I would gift her and still not have any capital gains tax liability. She could probably do this for two tax years. I can give her siblings cash gifts to keep things fair and equal.

2.) We could gift shares to the charities or schools we support. We would receive the full valuation of our gifted shares and the charity would sell the appreciated shares.

3.) Finally, we can leave it all for our heirs to deal with, they get the date of death step up and the problem is solved.

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

Thank you all.

averagelonghorn wrote: ↑Mon Dec 11, 2023 5:01 pm

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

This is what I might attempt to do. I dont have the exact dates but a good guess of the time frame. I am going to look the prices up and see if it would make a difference. As another poster mentioned, I am not going to pay a penny more than I have to Uncle SAM.

worthit wrote: ↑Mon Dec 11, 2023 7:52 pmThank you all.

averagelonghorn wrote: ↑Mon Dec 11, 2023 5:01 pm

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

This is what I might attempt to do. I dont have the exact dates but a good guess of the time frame. I am going to look the prices up and see if it would make a difference. As another poster mentioned, I am not going to pay a penny more than I have to Uncle SAM.

I don't see how this is useful if you are asked to show your work, ie something that at least proves the timeframe in which you purchased the shares.

otoh isn't MSFT up something like 10-15x since 2001? So a basis of $0 and 10% doesn't seem like a huge difference. imo the best suggestion so far was to unload the stocks somehow in the 0% bracket or by donating.

averagelonghorn wrote: ↑Mon Dec 11, 2023 5:01 pm

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

Average price, not lowest. The IRS will give some latitude in these cases as long as you make a good faith effort.

The low point for the stocks you mentioned in the aftermath of the dotcom bust might as well be near zero cost basis compared to where they are now.

Worth doing some more research. I would start by asking the brokerage you have them at now where you transferred the shares in from.

How could you possibly tax loss harvest MSFT purchased in 2000-2002?

You have to adjust for splits, its about 10X what it was in 2000.

Donating the MSFT to a DAF is not a bad idea, if you'd otherwise make charitable contributions.

Even QCOM is now higher than its .com peak, just took 20 years.
Alas CSCO still below .com peak.

worthit wrote: ↑Mon Dec 11, 2023 4:23 pmCisco

You might be able to tax loss harvest!

alex_686 wrote: ↑Mon Dec 11, 2023 8:31 pm

averagelonghorn wrote: ↑Mon Dec 11, 2023 5:01 pm

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

Average price, not lowest. The IRS will give some latitude in these cases as long as you make a good faith effort.

Seems ripe for gaming. If you bought below average, claim ignorance, and use the average. Especially, multi-year periods.

alex_686 wrote: ↑Mon Dec 11, 2023 8:31 pm

averagelonghorn wrote: ↑Mon Dec 11, 2023 5:01 pm

rkhusky wrote: ↑Mon Dec 11, 2023 4:32 pmAs alluded to above, you could use the lowest price in the time frame that you think it might have been purchased.

This is what I would do (and have done with very small amounts of gifted shares even older than that) if you really can't lock in a date of acquisition.

Average price, not lowest. The IRS will give some latitude in these cases as long as you make a good faith effort.

Don’t see how this is a good faith effort unless you have solid evidence of the date the shares were acquired. Knowing a “general timeframe” could be the same as knowing nothing if it’s based on hearsay and not evidence. Even picking the lowest price in a time period is not good faith in those circ*mstances

nassau34 wrote: ↑Tue Dec 12, 2023 12:54 amHas anyone actually gone through the process of making a good faith estimate of the cost basis and had it questioned by the IRS, or had it pass IRS scrutiny without any follow-up questions or audit? This is not an uncommon situation, and someone should have valuable insight to share.

I did this on my taxes in 2022. No questions were asked. I guestimated the month and year of purchase and used an average price during that month.

Just do your best to estimate a price. "Good faith" means you have no intention to cheat. I disagree with those saying "use zero cost basis" or find the lowest price you can. You don't have to punish yourself. If IRS disagrees with your estimate, they will send a letter and you can pay (or argue. I would just pay it.) Having incomplete records is not a crime, and estimating a price is not fraud. Unless this is hundreds of thousands of $, IRS has bigger fish to fry.

I would try to guess when I bought the stock and use a median price for the year.

Brianmcg321 wrote: ↑Tue Dec 12, 2023 4:30 am

nassau34 wrote: ↑Tue Dec 12, 2023 12:54 amHas anyone actually gone through the process of making a good faith estimate of the cost basis and had it questioned by the IRS, or had it pass IRS scrutiny without any follow-up questions or audit? This is not an uncommon situation, and someone should have valuable insight to share.

I did this on my taxes in 2022. No questions were asked. I guestimated the month and year of purchase and used an average price during that month.

I did it some years ago, except with accurate basis information (thank you Quicken). The IRS didn’t know that my information was accurate and didn’t ask, so (except for bad luck) a good faith effort would probably have sufficed.

bberris wrote: ↑Tue Dec 12, 2023 5:11 amJust do your best to estimate a price. "Good faith" means you have no intention to cheat. I disagree with those saying "use zero cost basis" or find the lowest price you can. You don't have to punish yourself. If IRS disagrees with your estimate, they will send a letter and you can pay (or argue. I would just pay it.) Having incomplete records is not a crime, and estimating a price is not fraud. Unless this is hundreds of thousands of $, IRS has bigger fish to fry.

I would try to guess when I bought the stock and use a median price for the year.

The total value of all these stocks combined currently is around $30K. Not a lot. The more I think about it, I am just going to make a GFE and if the IRS comes back asking for $$$, I may just end up paying.

Thanks all.

If it were me (which it isn't) I would actually do what one blogger said:

1). narrow down the date range involved as best as possible
2). go to Yahoo Finance under the stock, look at historical data pricing high and low for the period
3). take the average

The IRS is free to disagree but I don't think any reasonable agent would argue this was bad intent.

If it were me (which it isn't) I would actually do what one blogger said:

1). narrow down the date range involved as best as possible
2). go to Yahoo Finance under the stock, look at historical data pricing high and low for the period
3). take the average

The IRS is free to disagree but I don't think any reasonable agent would argue this was bad intent.