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No. of Recommendations: 4 to my question: if i sell stock (i have only ever bought), does the bank report the cost basis on some form to the irs? if so, then it seems that i shouldn't sell before i get the bank's records corrected - is this right? or is it ok to claim the correct basis on my returns if i know i am right (i have the documentation to prove it).

When you sell stock, only the sales proceeds are reported to the IRSby the broker/bank. The IRS assumes the full amount is taxable income until you provide your original cost basis and calculate your gain or loss on Schedule D. It is your obligation to maintain the documentation to support the cost basis you use.

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