Last January my wife's grandpa gave her a chunk of stock. I don't know what his cost basis is, and the only information I have is the price at which it was gifted to my wife. I read that my cost basis will be the lower of the transfer price or grandpa's cost basis. That doesn't make sense. I certainly don't want to ask him how much he paid for the stock, and since he's had it for years, buyouts and splits, I doubt he knows either. When we decide to sell, what will my cost basis be?The cost basis will not be the lower of the transfer price (I assume you mean the value on the date of the gift) or grandpa's cost basis. The cost basis will be grandpa's cost basis. If you can't prove what grandpa's cost basis is, the IRS will gladly give you a cost basis - zero.So, it would be worth it to ask him. If he had decided to hold on to it and sell it himself, he would have had to figure out his basis too. It's not an unreasonable thing to ask, and I'd bet he'd rather help you figure it out than have you pay tax unnecessarily, wouldn't he?Chris Risercrisercriser@mayer-riser.com
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