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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15606
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am assisting someone in prepared her 2010 individual federal

Resolved Question:

I am assisting someone in prepared her 2010 individual federal income tax return using Form 1040. In December 2010, she sold shares of common stock in two different companies that were held in street name by a broker. The broker reported the proceeds from the sale on a Form 1099-B. The taxpayer knows she acquired the shares several years ago; thus, conceivably she could report the gain or loss from the sale of the shares as a long-term capital gain or loss on Schedule D. However, she has no records of when she acquired the shares that were sold or how much she paid for them. What is the proper way to report the proceeds from the sale of the shares under those circumstances?
Submitted: 6 years ago.
Category: Tax
Expert:  Robin D. replied 6 years ago.

Robin D :

Hello and thank you for using Just Answer

Robin D :

Since the stocks were held in street name that means the brokerage houses kept the records of the purchase. Have the individual contact them and request the date and cost.
With street name holdings, while you will not receive a certificate, your firm will send to you, at least four times a year, an account statement that lists all your securities at the broker-dealer. Your broker-dealer will also credit your account with your dividend and interest payments and will provide you with consolidated tax information.

JACUSTOMER-o2x51hjy- :

She did not acquire the shares through the brokerage firm. I believe in one case, she purchased the shares as part of her purchases through an employee stock purchase program during the 1980's or 1990s. Once she got the share certificates from the company's transfer agent she endorsed it over to the brokerage firm and sold off the shares in various transactions. So, the shares sold in 2010 were the last of the acquired shares, but she has no records of any of the purchases.

JACUSTOMER-o2x51hjy- :

...sorry,

JACUSTOMER-o2x51hjy- :

in the second case, I believe she acquired the share either through another employer's stock purchase program or she received them from the company as part of a bonus award. Again, she endorsed over the certificates to the brokerage firm and sold off the shares in various transactions.

Robin D :

The best thing then is that you could look at the shares for the time when she endorsed them over. Look at the prices diuring that timeframe and if they did not cvhange too much per share get an average.
Say she endorsed them in May of 1996, you could look at BigCharts http://bigcharts.marketwatch.com/historical/default.asp?symb=MSFT&closeDate=5%2F01%2F1986&x=22&y=16
and find out what the price was in April 1996 through May, take high and low and divide

Robin D :

Ultimately if the taxpayer does not know their basis then they will pay tax on the whole

Robin D :

.As far as the employment, HR of the company would be the first place to look.

Customer:

If she opts to pay tax on the whole amount of the proceeds (which are not huge), do you report the proceeds/gain on Schedule D as a long term gain (even if you can't substantiate a purchase date)?

Robin D :

Yes, that would be acceptable

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