this can not be a correct answer !!
if you do not determine a valid cost basis for non-covered stock you pay gain equal to total proceeds - as if you paid nothing originally.
non-covered stock is stock you purchased/was purchased prior to 2011.
you need to find historical data to determine what the cost was for all stock (by purchase event) at the time of the transaction. note for Employee Stock Purchase Plans that the employee gets a discount (e.g., 5%) or the purchase price is the low of beginning quarter cost vs ending quarter cost, or some other algorithm, you need to adjust the cost from the historical cost on that day.
and yes this is a significant burden on the stock holder when selling stock purchased/gifted with an acquisition date prior to jan 1 2011.
if you don't do all this calculation, you pay a lot more in taxes
and this gets very complicated if you are making incremental stock purchases at every pay period (e.g., 1st and 15th of month) and doing dividend reinvestment. (in my case, 26 pay periods + 4 quarterly purchases per year from Feb 1980 through 2010, almost 900 entries.
if i used the previous answer, i get taxed on long term gain of $319,590, instead of long term loss of $1256. really big difference in Tax owed.
