Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote:

- quote -

That's a tough situation because the grandparent is usually
trying to be "helpful" by providing the kid with an
opportunity to learn about money, investing, etc. I try to
remind them that such might have worked just fine when THEY
were kids - back before the days of comprehensive social
security number reporting, etc. But these days it's just a
mess and (sadly) should probably be avoided.

I much prefer Jan's idea of donating odd shares to charity.

MTW

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janztaxnospam[at]aol.com (JanZtaxNOSPAM) writes:

- quote -

Oooo...good idea! I'll have to remember that
next TaxAide season as a suggestion.

I always shudder on behalf of the descendant
when a TaxAide "client" in this situation mentions
they're considering giving away their shares to a
child or grandchild. I'd like to find a way to
politely tell them to just let their (grand)children
acquire the shares by inheritance, instead.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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- quote -

I always recommend that my clients with old AT&T shares give
them away -- to a charity -- rather than sell them and try
to calculate basis.

Jan Zobel EA

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"Michael T Wing CPA" <mtwingcpa[at]yahoo.com> wrote:
- quote -

Not only is this a practical solution, I have on several
occasions made painstaking calculations of AT&T (Baby Bell)
spinoffs that a client has held since or before the 1983
breakup--in all cases the actual basis was nearly zero or
just a couple of dollars a share.

Charles Markham, EA

PS I never would have bothered for $25 worth of stock though.

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"Doc" <docsavage20[at]yahoo.com> wrote:

- quote -

For $25 I'd be tempted to tell you report the sale as though
you had NO basis. This will mean all the gain will be
taxable - though at long term rates.

The note you saw regarding the gift is because as the
recipient of a gift your starting point for calculating
basis is the donor's basis when the gift was made to you.
If whomever gave you the stock purchased it for you and
immediately gave it to you when you were born you can use
the cost of the stock at the original purchase date.
However, if the stock was part of a portfolio held by
someone else it is possible that their basis was effected by
similar events prior to your birth, in which case you may
never know what your actual basis is in this investment.

Of course, I can't recommend you ignore the tax rules, but
for $25 I'd be tempted to tell you report the sale as though
you had NO basis. This will mean all the gain will be
taxable - though at long term rates.

You also have to atempt to determine your basis in the
remaining stock so that you can calculate any gain or loss
in the future, should you decide to sell it - or, heaven
forbit, give it away!

Good luck,
Gene E. Utterback, EA

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docsavage20[at]yahoo.com (Doc) wrote:

[snip]
- quote -

When you receive stock as a gift, you have two different
ways to compute basis, and you have to determine which one
applies to you. The reason is that you cannot make a gift of
a tax loss: if your donor had a loss on the stock when he
gave it to you, you don't get any benefit from that loss.
With the sorry post-breakup history of AT&T stock, it is not
unlikely that there is a loss involved.

You have your donor's original basis, adjusted as they
explain from when he bought the stock, which is your "gain
basis". You have the fair market value as of the date of the
gift, adjusted as they explain from that date, which is your
"loss basis".

If the "loss basis" is greater than the "gain basis", your
donor didn't have a loss; use the "gain basis" as your
basis. But if the "loss basis" is less than the "gain
basis", you have one of the following:

If the price you sold the stock for is less than the loss
basis, you have a long-term loss for the difference. More
than the gain basis, you have a long-term gain for the
difference. Between the loss basis and the gain basis,
neither gain nor loss.

--
Chris Green

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In misc.taxes.moderated, Doc wrote:

- quote -

I estimate $1 and $5 for the two basis amounts. Can't get
a lot quicker, and certainly not more dirty. ;-)

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I hate to reveal a professional secret - but unless this
offends you, call the basis $25 and forget it.

There IS a rule called "de minimus" which even the IRS recognizes.

Nan, EA in LA

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I had 4 shares of AT&T stock, given to me when I was an
infant. I've mostly kept them as a keepsake, haven't really
paid much attention to them.

I'm just now getting around to doing my '02 taxes (was
procrastinating since I always get something back) Well,
recently they went through a 5 -1 reverse split (not 100%
sure exactly what that means) and also a spin off of some
AT&T to Comcast. As a result of this, I ended up getting a
$5 and change check for a fractional share of AT&T, and a
$20 something check for a fractional share of Comcast.

They sent me this long, complex chart for figuring a "tax
basis" since I need to report this on a schedule D, capital
gains/losses. They have this history of all the various
spits etc. the AT&T stock has gone through over the years,
and I'm reading through this, but then find that it says
"Use this UNLESS you got these shares as a gift. In that
case, consult your tax advisor to calculate your tax
basis.."

Jeezus, I'm supposed to hire a tax accountant over a lousy
$5 and $20 check?? Obviously I'm not going to go through
that. Is there some quick and dirty way to figure this tax
basis?

I appreciate any input.

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