40-70 year old ESOP stock cost basis that was gifted to grandchildren

[Doncappa]

My children were gifted stock from their grandmother that were purchased by my father in an ESOP between 1950 - 1983.  After my father died in 1994 my mother gifted them the stock.  They are thinking of selling the stock now, how do you come up with a cost basis for such a situation.  I called the employee investor relations that now handles the stock and they told me anything before 2011 is not on record.  All they can provide is the value of the stock on the day of the transfer in 1994. 

JIM

[Bsch4477]

If you don’t know the cost basis the IRS considers it to be zero. 

[Doncappa]

Thank you for the reply.  Unfortunately, this is the first reply like this although I find it more likely considering I am dealing with the government. I've received different answers for Computershare who has held the stock for the past 30 years and possibly who held the stock when my parents owned it before that.  But since both my parents are gone there is no way for me to know that.

Jim  

[fanfare]

They should use the transfer value in 1994 mentioned as their cost basis since

  that is your mom's basis and it is  a gift.

For non-covered securities ( BOX B or E) showing zero (unknown) basis, enter the correct basis yourself.
Use code "B" and put -0- in col (g).

@Doncappa 

[Doncappa]

Thank you for your reply.  Just so I have it straight, this stock was purchased through an ESOP at my father's workplace probably from 1950's through early 1980's.  When my father passed in 1994 the stock became my mothers, and she gave 5 shares of stock to each of my children through Computershare creating their own accounts, which probably held the stock for the company's stock program.   So is the date these accounts were created in April of 1994 the cost basis for these 5 shares of stock in the accounts?  Years later my mother gave my children an additional 25 shares each so the transfer date for those 25 shares would be the date they were transferred?

I appreciate your help with this.  

[TomK2023 · Accepted solution]

The initial 5 shares will use the April 1994 date. The additional 25 shares will use the second transfer date.

"The cost basis of stock you received as a gift ("gifted stock") is determined by the giver's original cost basis and the fair market value (FMV) of the stock at the time you received the gift.  If the FMV when you received the gift was more than the original cost basis, use the original cost basis when you sell."

Please see TurboTax FAQ for more information: How do I determine the cost basis of stock I received as a gift?