When you sell stocks or bonds or mutual funds, a copy of the form
1099B which is sent to you by the investment firm is also sent to the IRS
. If you then omit some or all of those transactions from your tax return
, then the IRS will recalculate your taxes on those transactions and automatically allow a cost basis of zero, which makes the entire sale subject to tax.
Once you amend his return and include the proper cost basis on these funds, this should greatly reduce any tax they are saying your father owes.
However, if these stocks or mutual funds were purchased prior to 2000, you cannot simply use the costs you have from the same purchases he made in later years. In all likelihood those costs would have been higher than what they were before the year 2000, and so you would be understating any gains he had from the sales
If you no longer have records of what the price was he paid for these stocks or funds, there are many websites which provide you with historical stock quote prices. All you need to do is enter the stock or fund symbol and the date range which you are looking for, and it will show you the closing price for that stock on each day in the date range you select. Here is a link to one of those sites.
Find the closing price for the stock you need according to the date your father purchased the stock. If you do not have a record of the purchase date, the financial firm should be able to provide you with this. However, if for some reason they do not have that information available, then there is nothing you can do but make your best estimate of when the stocks were originally purchased, and use that as your purchase date.
If this was helpful please press the Accept button. Positive feedback is also appreciated.
Thank you Leenie.