18 Apr Finding a stock’s cost basis
Q. I bought 100 shares of PSE&G in 1979 for $17 a share. Through the years I had dividend reinvestments. In 1982 I transferred the shares to some brokerage house, which was bought by another company in 2015. I sold 500 shares, but now the brokerage can’t get me a cost basis, saying they didn’t have the shares long enough. I gave them all my info and they can’t do their job. What do I do?
A. You have some options.
First, there may be an issue because your timeline is from 1982 to 2015.
Starting in 2011, the cost basis rules changed for brokers, said Michael Gibney, a certified financial planner with Highland Financial in Riverside.
“Starting in tax year 2011, brokers must report the adjusted basis and whether any gain or loss on a sale is classified as short-term or long-term from the sale of `covered securities’ on Form 1099-B, Gibney said. “Covered securities are generally shares of corporate stock acquired after 2010.”
Gibney said shares of stock in mutual funds and stock acquired in connection with a dividend reinvestment plan are generally not covered unless they were acquired after 2011.
Certain other types of securities, such as debt instruments and options, are covered if acquired after 2013, he said.
So generally, you can get cost basis data from sites like Yahoo! Finance if they are simply shares that are bought with no dividend reinvesting, Gibney said.
“The dividend reinvestments add a new wrinkle, and a difficult one,” he said.
You should try contacting the investor relations department at PSE&G to see if they can help.
If not, you could be in trouble because tax law states that if you have no documentation, the cost basis is zero.
Learn some more ways to calculate cost basis in this NJMoneyHelp story.
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This post was first published in April 2016.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.