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Subject:  Re: Basis Reconstruction 40 Years Date:  12/22/2005  8:19 PM
Author:  KennyO Number:  13581 of 18062

And here's what I'd expect to find: I suspect that your best-guess, good-faith efforts would be satisfactory.

Ouch! You know better than that! All the IRS needs to do is show that you received the proceeds of a sale or exchange. The burden of proof of basis is entirely on you. The IRS is free to assume the lowest basis on your behalf and you therefore owe tax on an oversize gain. If you can produce records (past years' returns, for example) that show you paid tax on any of the distributions across the years your basis will grow and your tax liability will shrink accordingly. The upside is that if you find complete records after paying the tax you can file a revised return to claim a refund of the excess tax paid. Of course that privelege expires after a defined time.

OTOH if you put some reasonable estimate of the basis in the return, one that looks mostly kosher, they probably won't challenge it. If they do a reasonable person will probably be smitten with a padded IRS bludgeon instead of the gnarly one.

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