Author Topic: Has anyone calculated the cost of funds going back 30+ years for tax purposes?  (Read 1131 times)

BTDretire

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I'm nearing the point where I'll start withdrawing money from appreciated mutual funds.
Some of these dollars were invested 30 years ago and every year since. Some may have changed funds several times. NON-tax advantaged accounts.
 Has anyone started doing this process?
Also for all your Tax advantaged funds, I assume there is no need, because you pay taxes on the whole amount. Excludes Roths.

BTDretire

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If you're not, how are you calculating your cost basis to calculate taxes due?

dandarc

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I don't understand the question - you don't know what you paid 30 years ago and neither does your broker / anyone else?

zinnie

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Fidelity and Vanguard track all of that, and when I transferred my company 401k to a Fidelity IRA, for example, all of that info followed it. Does your broker not have some of this info or something?

I did once have super old paper stock certificates that I moved to Fidelity and so they didn't have all that info. It was a pain to figure out, but you can look up historical stock/fund prices so as long as you have the transaction dates you can figure it out.

BTDretire

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Fidelity and Vanguard track all of that, and when I transferred my company 401k to a Fidelity IRA, for example, all of that info followed it. Does your broker not have some of this info or something?

 They only started tracking it in 2012!

I did once have super old paper stock certificates that I moved to Fidelity and so they didn't have all that info. It was a pain to figure out, but you can look up historical stock/fund prices so as long as you have the transaction dates you can figure it out.
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  I can probably find most of my deposits, but if I made a sale and paid the tax, and then reinvested, those will be much harder to tease out.
  I hope I'm imagining this as much more difficult than it really is. But it is boxes and boxes in the attic and many brokers over 6 moves and two states.


BTDretire

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I don't understand the question - you don't know what you paid 30 years ago and neither does your broker / anyone else?

  If I sell $20,000 of XYZ fund. How much tax is due?
I don't want to pay tax on the whole amount, some of the $20,000 was the initial investment.
 Maybe only $4,000 in the early years, and maybe $10,000 in later years.
The IRS could easily question the numbers at that point and the taxpayer would need to provide documentation to prove their tax payment is correct.

jim555

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If you can't prove your basis they will count it as zero. 
I had a money market fund for many years.  Every year it would pay monthly interest and I would report it as interest.  Never had an issue.
Then one year I sold it.  The MM fund always has a share price of $1.  I had to redo the taxes showing every interest reinvestment monthly purchase price and sale price.  This was to satisfy the 1099 report that showed the sale.  Couldn't believe they would waste time on it, but they did.

zinnie

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Oh man, you only have info from 2012 on?

Good luck! Hope itís easier than you think and that you donít have to declare $0 cost basis.

BTDretire

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Oh man, you only have info from 2012 on?

Good luck! Hope itís easier than you think and that you donít have to declare $0 cost basis.

 I have records going back 30 years, but I don't think the Mutual funds providers were required to keep records until 2012.
 I'll do a search to see exactly what the 2012 ruling is.

 EDIT to post the results of my search.

"Brokers are only required to keep a record of your stock shares purchased after January 1, 2011. Cost and holding period for mutual fund shares are only tracked for purchases after January 1, 2012. Brokerage firms start maintaining details about bonds and options acquired in accounts after January 1, 2014. Consequently, a broker or mutual fund company may have a record of cost for some recently purchased shares but not older shares in your account."
 From: https://finance.zacks.com/covered-vs-uncovered-shares-10752.html
 Several other sites show the same information.
  Next I'll contact Vanguard to see what records they have and how far they go back, even though they weren't required to. I'm disappointed they aren't open weekends, but that's why I'm only charged 0.04% on my VTSAX.  :-)


« Last Edit: January 07, 2018, 07:08:13 AM by BTDretire »

Bateaux

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I'm almost glad I don't have any pre 2012 taxable accounts.   I guess it only matters if you want to use first in last out or sell the whole asset. 

BTDretire

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I'm almost glad I don't have any pre 2012 taxable accounts.   I guess it only matters if you want to use first in last out or sell the whole asset.

It does matter.
Even if you sell the whole asset you stiil need to have have a cost basis, so you know how much is taxable.

Finances_With_Purpose

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I like my tax-deferred accounts even more after reading this post.

Wow, what a headache.  And what a trip back to (and reminder of) the pre-digital world. 

Just posting to say I am sorry for you.  I guess you can figure worst case is $0 cost basis, and then find whatever you can and use it - so long as it's worth your time finding it. 

BTDretire

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I like my tax-deferred accounts even more after reading this post.

Wow, what a headache.  And what a trip back to (and reminder of) the pre-digital world. 

Just posting to say I am sorry for you.  I guess you can figure worst case is $0 cost basis, and then find whatever you can and use it - so long as it's worth your time finding it.

 I'm surprised that your sorry for me, I would think many people have this problem. And most worse than me, because I had a just middleclass income most of my life, so I could tax defer most of my savings, high wage earners don't have quite as good of a chance to do that.
  That said about 35% of my stock market funds are in NON-tax derferred accounts.
 Even with that, I have a thread started that is "Can I have too much in Tax deferred accounts"
 With the major problem being RMDs, putting you in a higher tax bracket.

jim555

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For after tax accounts I don't reinvest dividends since I don't want to track basis for each purchase.

BTDretire

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 I may have overblown this situation. I have been poking around in my Vanguard account and find they have Cost Basis and Total Gain/Loss for the funds in my account.
 The only thing I can't find is, does this start with the first deposit I made into the account.
 I'm a little surprised to see the account is about 1/2 cost basis and 1/2 gains.
Really need to find how far they go back with data.
 But I'm now thinking I don't have to pull out and calculate anything. It's been done by Vanguard.
« Last Edit: January 07, 2018, 09:05:55 AM by BTDretire »

markbike528CBX

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BTDretire:   When the last tax bill was threatening to make FIFO First-In-First-Out the rule, I was a bit worried for my pre2012 holdings ( almost all of them). Vanguard has average cost basis ie sum of costs / # of shares.

Finances_With_Purpose

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I like my tax-deferred accounts even more after reading this post.

Wow, what a headache.  And what a trip back to (and reminder of) the pre-digital world. 

Just posting to say I am sorry for you.  I guess you can figure worst case is $0 cost basis, and then find whatever you can and use it - so long as it's worth your time finding it.

 I'm surprised that your sorry for me, I would think many people have this problem. And most worse than me, because I had a just middleclass income most of my life, so I could tax defer most of my savings, high wage earners don't have quite as good of a chance to do that.
  That said about 35% of my stock market funds are in NON-tax derferred accounts.
 Even with that, I have a thread started that is "Can I have too much in Tax deferred accounts"
 With the major problem being RMDs, putting you in a higher tax bracket.

I sympathize, in a really I-hate-paperwork-and-find-it-life-draining way.  But yeah, it's hard to feel as sorry for you as for folks who're haunted by a lifetime of poor decisions, or tragedies, as opposed to your paperwork hell.  (But I really do hate paperwork.  And taxes are never fun anyway.) 

Glad you found more info.