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Author: mrbrolun One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Help!! Girlfriend kept no records! Date: 3/23/2003 5:34 PM
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Sorry for the length of this post.

I'm trying to help my girlfriend with her taxes, and I'm running into some problems. I'm relatively new to investing, haven just gotten out of debt a couple years ago, but I keep a record of everything I buy, when I buy it, and what my cost basis was.

She's been investing since she was really young, and doesn't have any records. In addition to this, she just "got rid" of her broker (I'm not sure what she did, all I know is she now has posession of her stock certificates) because they were charging her a hefty quarterly maintenance fee.

I've got two (well, three) questions, and I would really appreciate some help:

1. She's got these stock certificates. There's no way for her to buy/sell anything unless she opens and account with a broker, correct? So, I'm thinking I should advise her to open an account with a discount brokerage firm and transfer the certificates to them.

2. It looks like her old broker was routinely selling stock in order to generate the cash for her quarterly fees. Also, there are some mysterious random sales, as well as liquidation of fractional shares on the last statement she received from her old broker. So, I think there are some gains that she needs to report.

She didn't buy all at once, rather she invested over a period of time, and it appears that she re-invested dividends as well. When I'm figuring her cost basis for the shares that were sold, can I pick which purchase-times/costs I want to use, or do I need to combine them all for an average cost basis? Due to the dividend-reinvestment, she has some short-term and some long-term holdings. Do I need to use the short-term rate before the long-term rate, or can I choose that as well?

3. Also, am I correct in thinking that you don't need to pay capital gains tax on dividends that you re-invest?

Any advice you could offer would really help me (us) out.

Thanks!
Matt
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