What to do if cost is unknown in capital gains?

#1 02-15-2004, 04:22 AM

John <John[at]john.com> wrote:

- quote -

> I have stock in a closely held company that I received as as
> gifts from my grandfather over a period of time years
> before. The company is buying back the stock, but I have no
> idea what the cost basis was. Since the stock was never
> traded it never had a real price. I though maybe divide the
> net worth by the number of shares, but they claim they don't
> have financial statements that old; but perhaps they are
> just being uncooperative.
> What to do? It would be pretty expensive to call it zero.

How did your grandfather acquire the stock? If he was a
founder, the basis might well be essentially zero.

Seth

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02-12-2004, 08:29 AM

John wrote:

- quote -

> I have stock in a closely held company that I received as as
> gifts from my grandfather over a period of time years
> before. The company is buying back the stock, but I have no
> idea what the cost basis was. Since the stock was never
> traded it never had a real price. I though maybe divide the
> net worth by the number of shares, but they claim they don't
> have financial statements that old; but perhaps they are
> just being uncooperative.

My God! Uncooperative? Just because they don't have old
financial statements? Not unusual.

- quote -

> What to do? It would be pretty expensive to call it zero.

Just might wind up that way. Basis of the stock is same as
your grandfather's basis, so burden of proof is on you to
have the records. If grandfather not around, probably no way
to know. So if company is very old, basis might actually BE
close to zero. However we have no way of knowing.

cheer$,
Harlan Lunsford, EA n LA

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#-1 02-11-2004, 11:44 AM

I have stock in a closely held company that I received as as
gifts from my grandfather over a period of time years
before. The company is buying back the stock, but I have no
idea what the cost basis was. Since the stock was never
traded it never had a real price. I though maybe divide the
net worth by the number of shares, but they claim they don't
have financial statements that old; but perhaps they are
just being uncooperative.

What to do? It would be pretty expensive to call it zero.

Thanks

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