Author Topic: How to figure out basis for stocks I bought in the 90's?  (Read 1220 times)

Aggie1999

  • Stubble
  • **
  • Posts: 147
How to figure out basis for stocks I bought in the 90's?
« on: February 27, 2017, 06:47:41 AM »
In the late 90's I bought a few shares of AOL. Skip ahead almost 20 years later and Time Warner sells the cable part to Charter. Apparently I had 1 share of Time Warner Cable that got sold for $100. I got a 1099-B for 2016 saying "Your sale of 1 shares of Time Warner Cable sold @ $100.00 ...".

So my question is how can I figure out what my basis was for this $100 share? I have no clue what I paid for the AOL share(s) back in the 90's, what the history of the shares is with the AOL merger with Time Warner, the later splitting of AOL from Time Warner, etc. I'm pretty sure I have lost money. Would rather claim a loss than just pay $15 of the $100 reported on the 1099-B to the IRS.

Update: I am able to see my transaction history in my Computershare account. It only shows transactions from 2009 though for Time Warner (classified as EXCHANGE) and Time Warner Cable (1 share classified as STOCK DIVIDEND/SPLIT). So not much info there.
« Last Edit: February 27, 2017, 07:22:22 AM by Aggie1999 »

SeattleCPA

  • Pencil Stache
  • ****
  • Posts: 526
  • Age: 57
  • Location: Redmond, WA
    • Evergreen Small Business
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #1 on: February 27, 2017, 07:57:40 AM »
If the 1099-B shows, truly, $100 of gross proceeds, you probably don't need to worry about this very much.

Your easiest course of action is to say you have zero basis. You'll probably pay a federal rate of 15%, so $15 on the $100. (BTW, we do this when someone has small transactions for which basis isn't available and the cost of coming up with a good number for those transactions isn't economical.)

Note: You might also be subject to the 0% long-term capital gains rate if you're in the 10% or 15% tax bracket which mean you really don't need to worry about this. If you want to learn more about how the zero percent capital gains rate works, this blog post explains the math:

http://evergreensmallbusiness.com/income-tax-buckets-not-income-tax-brackets/

If it makes you feel better, you can consider the $15 of tax or whatever not the tax... but the money you're paying for avoiding two decades of record-keeping and for avoiding wasting time trying to come up with a better number today.

And a final option: You probably could use an estimate. But I'd be very conservative. E.g., if you thought you paid $40 to $50 way back when, I'd probably use $35 as your basis estimate. Note that, using your example numbers and a 15% rate, this saves you $5 of the $15 of tax. So not much.

Final comment: If the number is $10,000 or $100,000, I would do the accounting to come up with a good number.


Aggie1999

  • Stubble
  • **
  • Posts: 147
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #2 on: February 27, 2017, 08:25:48 AM »
If the 1099-B shows, truly, $100 of gross proceeds, you probably don't need to worry about this very much.

Your easiest course of action is to say you have zero basis. You'll probably pay a federal rate of 15%, so $15 on the $100. (BTW, we do this when someone has small transactions for which basis isn't available and the cost of coming up with a good number for those transactions isn't economical.)

Note: You might also be subject to the 0% long-term capital gains rate if you're in the 10% or 15% tax bracket which mean you really don't need to worry about this. If you want to learn more about how the zero percent capital gains rate works, this blog post explains the math:

http://evergreensmallbusiness.com/income-tax-buckets-not-income-tax-brackets/

If it makes you feel better, you can consider the $15 of tax or whatever not the tax... but the money you're paying for avoiding two decades of record-keeping and for avoiding wasting time trying to come up with a better number today.

And a final option: You probably could use an estimate. But I'd be very conservative. E.g., if you thought you paid $40 to $50 way back when, I'd probably use $35 as your basis estimate. Note that, using your example numbers and a 15% rate, this saves you $5 of the $15 of tax. So not much.

Final comment: If the number is $10,000 or $100,000, I would do the accounting to come up with a good number.

What a vaguely remember is around $1k worth of AOL shares purchased in 1999. My current Computershare account shows 4 Time Warner shares owned. So taking into account the 1 to 3 reverse stock split of Time Warner in 2009 I probably purchased 12 shares of AOL in 1999. That would be pretty close to the $1k I remember.

Seems like I got the 1 share of Time Warner Cable for owning 4 shares of Time Warner. Assuming I go with $1k as my cost basis of the original AOL stock how do I calculate the capital loss of the one Time Warner Cable share that was sold? It is confusing me since this was basically an "invented" share based on the sale of the Time Warner Cable division to Charter.

BTW, I do want to sell the 4 shares of Time Warner stock this year. Current value is around $400 so the capital loss will be around $500 from my initial $1k investment. If I can deduct that from my 2017 ordinary income that's $125 I would not pay in taxes (I'm in the 25% tax bracket). So decent enough to try and claim. Of course I have no records of my purchase in 1999 so I wonder if I would just be opening up a can of worms with the IRS.

SeattleCPA

  • Pencil Stache
  • ****
  • Posts: 526
  • Age: 57
  • Location: Redmond, WA
    • Evergreen Small Business
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #3 on: February 27, 2017, 11:42:34 AM »
It sounds to me like you've got a pretty good estimate... Especially if you can remove the word "vaguely" from your description.

I would not go to much more work to harvest a $125 savings...

Aggie1999

  • Stubble
  • **
  • Posts: 147
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #4 on: February 27, 2017, 12:07:21 PM »
It sounds to me like you've got a pretty good estimate... Especially if you can remove the word "vaguely" from your description.

I would not go to much more work to harvest a $125 savings...

True on $125 not being worth a lot of effort. Think I'll do the following in case anyone sees a major downside. Go ahead and pay the taxes on the $100 sale from 2016. Then when I sell the remaining Time Warner shares this year subtract that from the ~$1k initial investment I remember and claim that loss on my 2017 taxes. Guess I could get called on it by the IRS for not having any documentation from the initial purchase but the probability is probably low.

dpfromva

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #5 on: March 19, 2017, 08:55:00 PM »
Oh, I concur about assuming 0 basis if its not worth your time to calculate. My daughters sold some very minor shares of Sunoco stock (my granddad was a Sun truck driver back in the day, and granny wanted the great grandchildren to have a few shares). I'm an accountant and do their taxes. Well the damn thing had spun off, split, partially cashed out and the investment included a nested Energy Transfer Partners partnership. Hours and hours and much research and many giant spreadsheets later, it was a few dollars of capital gain instead of a few more dollars of capital gain. Total waste of time. Learned my lesson.

financepatriot@gmail.com

  • 5 O'Clock Shadow
  • *
  • Posts: 39
  • Passionate about FI at www.thefinancepatriot.com
    • The Finance Patriot-  The road to early retirement
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #6 on: March 21, 2017, 08:23:40 AM »
I studied accounting in college.  Our tax professor suggested if you don't have the tax basis of the stock, if you look up the market prices on the purchase date, you can make an estimate.  If you don't know your purchase date, you can probably guess the purchase month.

However, it's up to you to determine if it's worth the effort or not.  If you were to get audited by the IRS, which is highly unlikely for most people, describing how you came up with a reasonable estimate would probably satiate them. 
Passionate about FI at www.thefinancepatriot.com

CupcakeGuru

  • 5 O'Clock Shadow
  • *
  • Posts: 51
  • Location: GA
Re: How to figure out basis for stocks I bought in the 90's?
« Reply #7 on: April 07, 2017, 06:29:34 AM »
I am trying to do basis for 9 stocks I bought in early 2000s. I was thinking of using Netbasis and wondering if anyone has tried it out.