Inherited Stock Cost Basis vs. Broker Monthly Statement and Tax Filing

[Themushj]

I am familiar with inherited stock having its cost basis based on the date of death. I am also familiar with taking the high and low on that day to determine the average as the new cost basis. I have kept detailed and accurate records in this regard.

However, my monthly statements still reflect the old cost basis. Merrill admitted they were supposed to adjust that at TOD, but failed to do so and now in order to correct it, they suggest I send a 3rd party company my father's last statement and of course pay a fee per security. The company states I can "email" them that information (which does not sound very secure to me.) Supposedly this would be used by Merrill to correct my monthly statements to the new cost basis.

But I have to wonder based on all what I have read on the Internet if this effort is really needed. I am sure I am not alone in this type of situation. Will the IRS accept a person's tax return if they use the cost basis they determined is accurate from for example Yahoo's Historical Data? ---Even if Merrill in this case sends them at tax time a different cost basis -- the original no doubt.

Thoughts on this would be greatly appreciated. 

[Bsch4477]

If audited the IRS should accept documentation that supports your reporting of the cost basis. 

[Mike9241]

rediculous of ML. Anyway this is what form 8949 says to do if cost basis is wrong - use code B and

• If this transaction is reported on a Part I with box B
checked at the top or if this transaction is reported on a
Part II with box E checked at the top, enter the correct
basis in column (e), and enter -0- in column (g).
• If this transaction is reported on a Part I with box A
checked at the top or if this transaction is reported on a
Part II with box D checked at the top, enter the basis shown
on Form 1099-B (or substitute statement) in column (e),
even though that basis is incorrect. Correct the error by
entering an adjustment in column (g).

also for date acquired use the dropdown or type in - inherited 

[NCperson]

@Themushj that sounds "crazy".  Have you discussed with your FA at Merril?  Or have you called the 800 number and requested the call be escalated (they front line associate will do that without hesitation as it is part of their protocol).

Discuss with the supervisor.   On the Bank side, they have an entire department called "estate" to handle matters after someone passes (close bank accounts, get cash to the beneficiary, etc.)  I suspect they have similar on the Wealth Managment side.  I can't believe the Bank doesn't do what you are requesting as a normal course of business on any publically traded holding.  

[Themushj]

Thank you all for the feedback. Very interesting what happened today after this posting a few days ago.

The Account Representative I talked to initially and which I sent Merrill's own TOD statement securely to him, told me again the people he talked to said there was nothing they could do. Pointed me back to the company to pay for a historical evaluation. I found no positive reviews on that company by the way.

On my email from Merrill for feedback, I was polite, but shared I was disappointed. Today I received  a call from the same Account Representative and he told me they fixed my cost basis and my new statements would reflect it. I told him that was great, then asked him how did it come about? He suggested a different day and time.

My May statement I just pulled down is correct for the stock I currently own. The TOD cost basis is now reflected. The only loose end is I don't know if they will adjust the one cost basis of the stock I sold prior to this recent adjustment for tax purposes. That stock no longer shows up on my statements obviously, but I am wondering what Merrill will report to the IRS as the cost basis for that single stock.

I am very impressed with this forum. Rock solid advice all the time. And I will admit, I was pleasantly pleased with Merrill's recent interaction.  I don't want to press my luck on them to be willing to give me a new trade confirmation statement reflecting the new cost basis.

[rjs]

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@Themushj wrote:

The only loose end is I don't know if they will adjust the one cost basis of the stock I sold prior to this recent adjustment for tax purposes. That stock no longer shows up on my statements obviously, but I am wondering what Merrill will report to the IRS as the cost basis for that single stock.

I don't want to press my luck on them to be willing to give me a new trade confirmation statement reflecting the new cost basis.

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You don't need a new trade confirmation. If your 1099-B at the end of the year shows the correct cost basis for the stock that you sold earlier, the trade confirmation doesn't matter. If the 1099-B does not show the correct cost basis, you can enter an adjustment on your tax return to correct the basis. The adjustment will be shown on Form 8949 with adjustment code B. See the details in Mike9241's earlier post above. Adjustment code B simply means that the basis shown on the 1099-B is incorrect. If the IRS has a routine way to report it, it must be a pretty common situation.