- quote -

That is what Vita Nelson does not tell you in her TV ads
where she tries to sell you the "secrets" of DRIPs,
information you can get for free on the web.

I have a lot of clients who have P&G Shareholder Investment
accounts (SIP). The opened them when they started to work at
the company 30 years ago and dedicated some amount of their
pay as an automatic deduction to the account every pay
period, like savings bonds. This was in spite of the fact
that their entire retirement plan was invested in P&G stock
(100% company contributed). I was dumb enough to do it
myself.

Some people get paid monthly and have 12 transactions per
year plus 4 dividend reinvestments for a total of 16 per
year. Some are paid bi-weekly for a total of 30. Some buy
stock in February from the Flexible Benefits Plan. Bottom
line is that in 30 years, you may have as many as 930
transactions each resulting in small lots of stock. There
have been many splits over that time so basis determination
is a nightmare.

I generally use Quicken to straighten out this mess. Open
up a Quicken file and just start entering the transactions.
Keep close tabs on the total shares on the statement vs. the
total shares in Quicken to insure you have not made any
mistakes. Basis of sales will be correctly calculated on
your capital gains report.

I tell people it will cost them 3 to 5 hours of time to
untangle this snarled fishing reel. I suggest they do it
themselves to save the cost. It is not my favorite kind of
work. Another way, if they have not sold anything (many
have not) is to sell the whole mess at once and then it is
just and addition problem, add up all the buys and that is
the basis.

No broker in his or her right mind would do this for free.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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- quote -

One of my deal-breaking criteria for choosing a brokerage
firm or a mutual fund family is that they track basis.

And this basis challenge is also one of the reasons I'm not
fond of Dividend Reinvestment Plans.

-HW "Skip" Weldon
Columbia, SC

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philmarti[at]aol.com (Phil Marti) wrote:

- quote -

Thanks, everyone!

I went back to my broker and appealed to him to help me
figure all this out. He's running the numbers for me now.

Someone mentioned turnover - he has been the broker since
the gift was originally given. There was another broker who
did the transfer, but he was at the same firm and is still
at that firm. So theoretically they should have all the
records on this. I have asked to get a printout of
historical transactions to fill in the gaps in my own
records, so I should be good to go from here on out.

jen

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If this was a dividend reinvestment plan, contact the
company and request a record of your purchases.

I did this once and, within days received a printout showing
each purchase by number of shares, date and price. Just what
you need.

Subject to correction by the real tax experts, it would seem
that half the shares of each purchase prior to the division
are yours and the other half your ex's.

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- quote -

Incorrect. The basis of a gift is the donor's basis. See
Pub 551 for the general rule and the exception.

Phil Marti
Topeka, KS

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shinypenny wrote:

- quote -

Unless you specifically identified the shares (more on this
later) sold, you must use the First In First Out (FIFO)
method (those 4 cent shares). In other words, it is assumed
you sold the oldest shares first.

Specific identification occurs when you either physically
hold the shares and turn specific shares over to the selling
agent or you hold the shares in street name and you inform
the broker in writing as to which shares they are to sell
and they provide a written confirmation.

--
Alan
http://taxtopics.net

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shinypenny0001[at]yahoo.com posted:

- quote -

The "cost basis" you cite may be from when the *giver* of
the shares bought them. *Your* cost basis could reasonably
be calculated from the date the shares were given to you --
so the figure you have may not be the right starting point.

And, I assume you mean the "dividends were reinvested" ...
in which case, each dividend purchased new shares at a cost
which you don't have a record of.

- quote -

As noted above, each purchase would have flowed from a
dividend. Many stocks have a combination of stock and cash
dividends (and perhaps stock splits). The broker might not
have all of that historical info available. You could query
the company, to see if they can provide a record of costs
for your stock holding. (You would be expected to provide
the total number of shares and date of the original "gift."
They could work with that information, if their stockholder
relations people are so disposed.)

- quote -

You would have had the right to select the actual blocks of
shares to be sold, if you had accurate records. Lacking
that, the broker is presumably choosing on some unknown
logic to apply those acquisition dates.

- quote -

Earlier, I suggested you might get a historical record from
the company. That is probably your best hope. The broker
should have had all of this information *only if the
brokerage was acting for the giver of your wedding gift*.
Otherwise, _your broker_ only knows what happened to the
shares since you deposited them in your account with his
brokerage.

Fifteen years is a long time in broker years (which are sort
of like 'dog years' -- with lots of turnover in the
business). And corporate mergers and acquisitions were
rampant during the 80s and 90s. So maybe your broker
deserves a little understanding.

It sounds like the stock gift you received turned out to be
quite worthwhile. Congratulations. And once you get your
historical records straight, you won't have to worry about
it in the future. If nothing else, you can turn it over to
your broker and say, "Now keep this straight for me!."
<grin
Bill

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shinypenny0001[at]yahoo.com (shinypenny) writes:

- quote -

Bless you or whoever told you to keep this information.

- quote -

yes

BTW, if you didn't specify what shares you were selling you
sold the oldest shares first. If that doesn't get you into
the reinvested dividends, you'll not have to worry about the
bases for those purchases. (Go ahead and do it now, though)
Also, you need make only one Schedule D entry for each
SALE, using "various" for the purchase date.

- quote -

He's not required to.

Phil Marti
Topeka, KS

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Want to make sure I'm doing this right; please advise.

I received stock as a wedding gift almost 15 years ago. I
have documentation showing the cost basis of these original
shares as $.04 each. Since that time the shares have been
continually reinvested and the number of shares has grown.
About 5 years ago I was divorced and my ex and I split the
shares.

This year I sold some of the shares to buy a house. The
statement the broker sent me is confusing me. For most of
the shares sold, it has a "NA" in the cost basis column,
with a note saying that there was not enough historical
information to calculate the cost basis.

For the various lots sold, there is a variety of different
"dates acquired" and all of them are between 1992 and 1995.
I am assuming this means they are the reinvestment shares,
and not the original shares which would have been pre-1990.
Unfortunately due to the divorce, I have no statements from
this time period.

To calculate cost basis of these shares, can I just look up
the historical prices on the date acquired, and use that? If
so, how come my broker couldn't figure this out himself?
What am I missing here?

Thank you in advance,

jen

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