13 Jul How do we find the cost basis of this investment from many years ago?

Q. I am unable to obtain the cost basis on the stock we cashed in worth $30,000. How should I figure out what to pay in taxes? Does it matter if it was in a 401(k) or not?
— Investor

A. We hope you made a nice profit.

But you’ve got some work ahead of you.

It is the taxpayer’s duty to keep track of cost basis of investments, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

If you do not have a written record of how much you paid for an investment there are a few alternative avenues you can consider, he said.

“You can go back to the brokerage firm or mutual fund company where you originally made the purchase,” he said. “Ask them if they still have records.”

If you know the date you made the purchase, you can go online and see the investment’s value on that date.

If the investment was a mutual fund, you need to consider whether you reinvested dividends.

“Most mutual fund investors elect to have dividends reinvested,” Kiely said. “This means that the fund’s cost basis is the amount originally invested plus all the income and capital gains dividends that were reinvested.”

You ask if it makes a difference if the account was a 401(k). Yes, it does make a difference, Kiely said.

“Most 401(k) accounts are made up of pre-tax contributions. This means that your cost basis is zero,” he said. “Plus, the withdrawals are ordinary income, not long-term capital gains.”

And, he said, if you made after-tax contributions to a 401(k) plan, the plan custodian is required to keep track of the cost basis.

Good luck, and consider working with a tax professional if you need additional guidance through the process.

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This story was originally published on July 13, 2023.

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