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I am a trustee responsible for the investments of an aged aunt whose memory is failing and whose records are incomplete

I am trying to reconstruct a reasonable basis for an investment in the Puritan fund that was begun in 1965. For most of the investment the dividends and capital gains were reinvested in the fund.

Fidelity claims that they cannot provide a table of the dividends and capital gains they paid back that far. I'm disappointed in that response and I am looking for alternative sources.

Am I likely to find this information in old back issues of Barron's or the Wall Street Journal? I did a quick on-line check of the New York Times. With patience I found the right page of the financial section (each pdf copy of a page takes a while to load and then magnify so that it is readable.) All they provided in 1965 was the trading range for the day and an 'x' to show if the fund was ex-dividend.

Can anyone think of other places to look?

Thanks

Baumgrenze
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I am a trustee responsible for the investments of an aged aunt whose memory is failing and whose records are incomplete

I am trying to reconstruct a reasonable basis for an investment in the Puritan fund that was begun in 1965. For most of the investment the dividends and capital gains were reinvested in the fund.

Fidelity claims that they cannot provide a table of the dividends and capital gains they paid back that far. I'm disappointed in that response and I am looking for alternative sources.

Am I likely to find this information in old back issues of Barron's or the Wall Street Journal? I did a quick on-line check of the New York Times. With patience I found the right page of the financial section (each pdf copy of a page takes a while to load and then magnify so that it is readable.) All they provided in 1965 was the trading range for the day and an 'x' to show if the fund was ex-dividend.

Can anyone think of other places to look?


Hi,

I can't claim to be a tax specialist, CPA or attorney -- so take this for what it's worth.

I assume that you are trying to establish a cost basis to determine capital gains in 2005, or for the future. As far as I know, the biggest reason to do that would be accurate tax reporting.

So my first stop would be the IRS website, where every conceivable form, schedule, instruction book, and various guidebooks are all available for download. I suspect that they mention this somewhere in the instructions for Schedule D, or some such place.

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

If you do not have actual transaction records to go by, and if the fund company will tell you in writing that they don't have the information, then what are you supposed to do? To put it in even more practical terms, how on earth would the IRS dispute your figures, since they'd be stuck with the same blank wall and missing data? Every year, people lose records to fire or other unexpected reasons. Life goes on, and the IRS does not require us to be magicians.

I'm a little surprised that Fidelity claims not to have the information. As for searching through Barron's or the WSJ... I don't know if I'd bother looking. Could such a publication report every distribution from every security being traded in the USA, day in and day out? Perhaps others can say for sure, but I find it hard to imagine.

And perhaps there are other sources for such data, and if so, perhaps somebody here can tell you where to find them. If not, my suggestion would be to find the oldest reliable data, figure out a five or ten year average of the total annual distributions from that point forward, and just apply that average to each of the years before that point. I'd think that you'd be safe using either a percentage of the price, or perhaps even an absolute dollar figure, from that averaging process. Either way, figure out the number of shares "theoretically" purchased by using the closing price 30 days after the X-dividend date (or whatever kind of time lag that fund uses; most of mine are 30 days).

That's a heck of a lot of work, but if you hang onto the calculations to demonstrate the effort to be fair, accurate and honest, I don't think anybody is going to squawk. You are clearly trying to do it right.

The Schedule D also offers the opportunity to add other data to explain what is being reported. So, mark any related transactions with an asterisk, and add an explanatory page describing how you got the figure.

You may want to run this idea by a tax attorney or other specialist before proceeding, but it's the most sensible thing that comes to mind. Still, an awful lot of work -- I hope she had a ton of that fund. :-)

Good luck!
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Yes, not being able to tell you the history, that is kinda funny since yahoo reports the worst year was 1969. Wonder why Fido doesn't have the data????


Since this is a large cap / value fund, I beleive you should be able to estimate its returns from the Category Average.

Another source may be S&P Micropal - I beleive requires a subscription otherwise I would look it up for you.

Here is an article I had read where the individual quotes his source as S&P Micropal and uses the Puritan Fund - under FFIDX.

http://www.zunna.com/CustomResearch/FFIDX_IGT6200Zero.pdf

So the data must exist.

Sorry, not more help.

DrTarr

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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.

KennyO
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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.

The IRS is *not* free to be cavalier or capricious in its assumptions! The only time it is "free" to "assume" a lowest-possible basis (which is ZERO) is if you do not file anything at all. That's not what I suggested, by any means.

If one provides documentation for failed efforts to find actual numbers (like a written response from Fidelity), and documentation showing how the reported cost basis figures were derived (especially by a pretty difficult process like the one I described), then the "burden of proof" falls back on the IRS. Because, after all, a tax dispute can ultimately end up in court, and at that point the test really boils down to what a reasonable person would think or do.

I said before, and repeat now, that this is the opinion of somebody who is not a professional tax attorney -- but then again, I have been around the block a few times. So take this as opinion, or however you want. But if an IRS examiner *adjusts* the data in a taxpayer's return, putting in low, capriciously chosen numbers, in place of those that a taxpayer has painstakingly calculated based on reasonable assumptions, and duly entered onto a legal tax form, that examiner's actions can be appealed and potentially overturned. And examiners are not anxious to get into that situation, anymore than taxpayers are anxious to be audited. The "honor system" cuts both ways.

...if you put some reasonable estimate of the basis in the return, one that looks mostly kosher, they probably won't challenge it.

Um, isn't that exactly what I said?
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The IRS is *not* free to be cavalier or capricious in its assumptions! The only time it is "free" to "assume" a lowest-possible basis (which is ZERO) is if you do not file anything at all. That's not what I suggested, by any means.

I neither stated nor implied caprice on the part of the IRS. And where I wrote "lowest" you won't find the word "possible." You're giving a straw man a sound thrashing, there. Lowest in this context means the lowest of any number of reasonable estimates because different sources and different methods will obviously yield different estimates. Based on experience and internal auditing guidelines the IRS gives greater credence to some sources than to others. That said, no matter the source or amount of the estimate of basis, if the tax due is relatively small the auditor or agent is going to be interested in a quick resolution so they can move on to bigger things. Been there. They rarely quibble over small stuff because it's not a good use of their time and resources.

KennyO
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