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Hi folks,
Have a stock Drip account in a UGMA account for son that was started very early in his life, the state is CT.

He's been an adult for quite a few years.
I haven't gotten around to transfer the stock to his name, instead, I just give him the 1099-DIV to report on his tax return.

I have been tracking the cost basis in Quicken.

I know if I transfer it into his name, if he doesn't sell it, I will have to keep track of the old cost basis for him going forward, which isn't practical.

I think he would just like to sell it - get rid of the manual cost basis thing, and buy some other stock where now the brokers have to keep track.

Is it worth me bothering to transfer it into his name, only to have him sell it in his name?
Or could I sell it and just include the gains in his tax return, as we have been doing with the dividends?

thanks in advance
nag
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I know if I transfer it into his name, if he doesn't sell it, I will have to keep track of the old cost basis for him going forward, which isn't practical.

Why would you have to keep track of it? Give him a copy of what Quicken says the basis of the stock is as of the date he's taken over the account, and then wash your hands of it. He can decide if he wants to keep reinvesting dividends (which I presume is the biggest concern you have, since the past basis already is determined) or get them in cash, and he can decide if he wants to sell.

Is it worth me bothering to transfer it into his name, only to have him sell it in his name?
Or could I sell it and just include the gains in his tax return, as we have been doing with the dividends?


Assuming he's actually reached the age of majority per your state law (they aren't always 18 or 21), I would suggest that you not take any actions on his behalf, other than starting and signing paperwork to transfer the account to him.

AJ
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Have a stock Drip account in a UGMA account for son that was started very early in his life, the state is CT.

He's been an adult for quite a few years.
I haven't gotten around to transfer the stock to his name, instead, I just give him the 1099-DIV to report on his tax return.


I set up a UGMA account here in New Jersey for a friend of mine when she was only a few months old. The value of that account more than doubled by the time she went to college. Unfortunately, college expenses increased even more than that. While she was in college, I wrote checks on that account payable to the school for tuition, bookstore, etc. So by the time I was required to turn the account over to her (when she became 21 here in NJ), the was less than $20 in cash and no stocks anymore in her account, so I had the broker issue her a check for that amount.
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As always, folks on the fool are such a terrific resource!

Hadn't thought of this -
wash your hands of it. He can decide if he wants to keep reinvesting dividends
I know he wouldn't be inclined to keep track of the cost basis going forward, but without reinvesting he wouldn't have to.

And wish I had thought using the account to help fund college (which we took care of...)

I'll get the transfer going and explain his choices to him.

Thanks much!

nag
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Hadn't thought of this - wash your hands of it. He can decide if he wants to keep reinvesting dividends
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I know he wouldn't be inclined to keep track of the cost basis going forward, but without reinvesting he wouldn't have to.

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You're already giving him his annual 1099-DIV and letting him do his own taxes. If he's that much of a responsible adult, he can keep track of a single DRIP account.

For myself, using Quicken seems like a pain. For a specific task like cost basis of a DRIP account you can suggest that he just:
1. Keep an old-fashioned paper file with your year-end statements (or quarterly, if they don't give you an inclusive annual statement.) You should be doing this, along with your Quicken data, for substantiation. Give it all to him.

2. Keep a running tab of the cost basis on an Excel (or similar) spreadsheet. This will come in handy if he makes a partial sale.

If you or he have never sold shares from this account, you have probably assumed that shares would be sold on a first-in, first-out method (or specific ID, method perhaps, if the custodian is cooperative.) For shares acquired after 2010, an average cost method can be used, which was previously available for mutual funds only.

Regardless of the method, for purposes of partial sales, a spreadsheet can work better than Excel in coming up with the right cost of shares sold, better than Quicken, at least as far as I can imagine. Of course, if the entire batch of shares in the account is sold, the total cost is the total cost, and you can enter it all on one line with "various" for date acquired. Except, of course, for shares acquired less than a year ago, which are short-term.


Bill
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If he's that much of a responsible adult, he can keep track of a single DRIP account.

He's responsible all right, but I am finding that young folks do their finances totally different than what I do, and did while getting to my age.

Gone are the moneyorders/checks, and I admit I've been able to get away from them as well.

But back then, that was the way to pay the bills - and you needed envelopes and stamps as well, which might have some young people scratching their heads.

Now there's ATMS, charge cards (to pay off in full every month) and web banking to pay bills, set on automatic.

I know some young that don't reconcile (I mean really reconcile) their accounts - they look, it looks good, done.

When I got into Quicken in the DOS days, it saved me so much time to reconcile the checking account...
no more spending hours writing the outstanding checks on the back of the form and then figuring out where you went wrong if the numbers didn't match.

I had multiple drips due to the days of brokerages charging crazy fees and requiring whole lots.
So I was always spending time tracking them. I guess I got use to it, but even I'm downsizing on that and consolidating.

I just think folks want and can get things on autopilot today - which wasn't the case years ago.
And so I imagine he wouldn't want to bother.

nag
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