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I am trying to help a friend, who owns a bunch of stocks, do her taxes and get a handle on her financial situation. Some stocks were sold this year, so I have to figure out how to get a bais number so I can figure capital gains.
The situation is this:
- Divorced in 1988 and received stocks they had acquired during the marriage. No info in divorce papers on basis. One call to ex, but ex claims no recollection of anything about these stocks or their basis and claims he has no paperwork about this.
- All stocks originally acquired as AT&T stock sometime 1967 through 1977 through employee stock purchase plan. Not sure if they were acquired consistently during this time or not.
- The only records available to me are from 1988 forward.
- My friend has no idea if divs were reinvested prior to 1988.
- I have found all the info on ATT site re: figuring the revised basis due to all the spin offs, etc.

Obviously you're gonna have a lot of work to do & cannot possibly get an accurate, exact answer. You'll have to make some reasonable, conservative estimates & assumptions, and carefully & clearly document them (you'll need to be able to demonstrate reasonableness should she be so unlucky as to be audited). My approach would be this:

1. I'd probably assume they were bought evenly throughout the period since no evidence exists to demonstrate otherwise.

2. Try to find out details of the ESOP as to when they executed stock transfers (i.e. were they done in a lump sum on a specific date; if so you should be able to dig up share prices on the transfer date). If that's the case use the average of the opening & closing price on that date as the price per share.

3. If you can't find anything demonstrating an exact date, things are a little tougher. I'd porbably try to determine an average price of the shares each year and use that average as the purchase price for that year's assumed acquisitions.

Again, make sure you clearly document your assumptions & estimates. If she's audited she'll need something to demonstrate the reasonableness of the calculations. Even with them the auditor COULD disallow the estimates since you've got nothing concrete to demonstrate it. IMHO I doubt an auditor would totally disallow but might reduce the estimates.

Good luck,
Gregg SeaPA
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