We have invested in a firm for the past ten plus years (not an ESO or ISO). Over time, we have received a return of capital to bring all of the cost basis to zero except for a couple of recent purchases. So we essentially have three “lots”:
- A long-term lot, various purchase dates, zero basis (90% of the shares)
- One long-term lot, two years old, basis is known (5% of the shares)
- One short-term lot, eight months old, basis is known (5% of the shares)
We sold most of our ownership last year as part of a recapitalization and now need to figure how to represent cost basis on our personal return. So essentially for this one sale, we have some lots that are Various, and two others where we know the specific basis and dates. We rolled over some of the money into ownership of the new firm. The "Various" long-term lot could cover the entire sale, but we would like to use the two recent lots to clear them out.
Questions:
- Can we choose to roll over only the early zero basis shares and sell / pay tax on a combination of the three lots (part of the zero basis lots, but all of the more recent lots)?
- If yes, should we have three lines to show each, where we sell a portion of the zero basis lots, but have two addt’l lines (with actual acquisition dates and cost) for the more recent lots?
- Or should we combine the long-term lots, specify Various, and use the recent long-term cost basis for all of the long-term sale. The short-term lot would still have its own line.
- Or do we need to come up with some average cost for everything?
- Or do we have I have to use FIFO, and assume only the long term zero basis stuff was sold and roll the recent purchases?
- Ideally we would use the specific lots method, but the "Various" dates for the older shares will make it tough to specify and have records for the lot dates for those. Can we use "Various" when using the Specific Lot method considering that they are all zero basis?
Thanks for any guidance!
