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Financial Planning / Tax Strategies


Subject:  Re: Schedule D question Date:  4/8/2003  12:58 AM
Author:  lorenzo2 Number:  64921 of 130014

Is it ok to just use an avg price for the missing purchase on the sch D-1? Would the ombudsman's office be able to look up such a detail?

Not really. Strictly speaking, you've gotta know the basis of what you've sold. I don't know what you mean by the "ombudsman's office" so I can't say if he/she can help you. It's generally not hard to find the price of any stock on a particular day, but that works only if you know when you bought those missing shares. So what do you do if you can't find the purchase confirmation, can't find monthly/quarterly/annual statements, and otherwise can't reconstruct the purchase?

The IRS won't argue at all if you use a cost basis of zero for those 100 shares, but you're probably not crazy about that option. I guess if I were in your shoes I would make a best guess and put down a reasonable number for the basis of those shares. If you can say with some degree of confidence that you bought them between dates A and B, then take an average price in that period - or if you're really conservative, take the low price during that period. But be aware that if you're audited and asked to prove your numbers, you'll possibly wind up stuck with a zero basis.

I don't want to sound like a scold - but I really don't understand why people don't keep track of their investments. You can't depend on the broker to do it for you, as you've discovered. It's not hard to keep confirmations, monthly/quarterly/annual statements, or (as I do) keep a spreadsheet of your own as a sort of belt-and-suspenders backup record.

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