Gifted stock

[confusedrf]

This is likely too complicated a question to get a complete answer here, but if somebody can point me to a 'selling stock for dummies' or something sight. I appreciate it.

When we got married some 30 plus years ago. My dad gave us four thousand dollars and a t and t stock as a gift. It is spun off stuff left and right over the years.  I believe some of the stocks that spun off have spun off themselves.

Recently we received spun off warner brothers stock and I decided to sell it. Turbotax was very nice and imported the info but it's asking me to review things. One question it asks is if I received the stock as a gift and if so , it starts o ask me all sorts of other questions about a cost basis that i'm not prepared to answer.

Would this Warner brothers spin off be considered a gift since it was a spin-off of another stock yhat spun off of the original at&t gift?

Maybe I need an accountant but I hate to do so considering the sale of the stock was a wopping "$200 and the 1099b indicates I had eighty seven dollar loss.

Thoughts?

[Bsch4477]

In view of the complicated history and small amount at issue I would just report a zero basis in the stock and be done with it. 

[DavidD66]

Do you know how your broker obtained a cost basis for your Warner Brothers shares?  When stock is gifted to you, your cost basis is the same as the person that gave it to you.  My wife had some AT&T stock that was given to her as a child by one of her grandparents.  There had been so many spin offs and mergers that I determined I could never determine the cost basis.  So I donated the stock, since you don't need to know the cost basis to take a deduction for the full current value.  I bought new shares and my wife never knew.  

I suggest you answer that you purchased the stock, use a cost basis of zero and use "various" as the acquisition date.     

[confusedrf]

What is the implication of putting zero as the basis?

As an  fyi the 1099b  shows a cross basis which I'm guessing is the value of the stock when it split? That vs what it sold it for seems to have resulted in a small.loss.

If I say it was not a gift It was a gift if I don't think it asked any further questions and just uses whatever was important on the form.

[DawnC]

If you use a $0 cost basis, all the proceeds will be capital gain.  You would pay the most tax if your cost basis is $0, so there would be no inquiries.  If you claim anything else as the cost basis, you have the burden of proving if audited.  Reporting $0 now will result in paying more tax but taking less risk than guessing an approximate basis and possibly receiving an inquiry. 

The basis of securities you receive as a gift depends on whether your ultimate sale of the stock produces a profit or loss. If you sell for a profit, your basis is the same as the basis of the previous owner.   In other words, the basis is transferred along with the property. If you sell for a loss, though, the basis is either the previous owner's basis or the value of the stock at the time of the gift, whichever is lower. In other words, you don't get to write off a loss that occurred while the donor owned the securities.

Tracking Stock Basis

[confusedrf]

Well, I certainly can just put a cross basis of 0 as the $200 is not going to significantly impact on my taxes. However if I decide to sell.my split  comcast that's gonna be a far different story.

If I look back I believe from the tables I've seen the stock was at approximately $22 a share. And we had we're given four thousand dollars as a wedding gift. I should have this paper somewhere temperature all this..about 189 shares.  Knowing that. How the heck do I know the cost basis of these 18 shares of Warner brothers some  thirty plus years later.... I would assume the math would be the same if I ever sold my comcast.

[DawnC]

Gifted stock and stock splits, when you don't know the purchase date and/or basis, can get messy.    But if you know when the stock was purchased, it is much easier to find the cost basis:

• Sign in to your brokerage account
  • Although your broker may not include your basis on your 1099-B, it doesn't necessarily mean they don't have it.
  • If your current broker was the selling agent, there's usually a wealth of documentation available in your online brokerage account that can help, such as detailed reports on each sale.
• Look at previous broker statements
  • Review your records for the trade confirmation when you bought the shares. (It's always a good idea to save these for tax purposes.)
  • If you purchased the stock at different times or haven't sold all the shares at once, you may have more than one trade confirmation statement.
• Contact your brokerage firm
  • Your broker should have a record of the purchase, if you bought the stock from them.
  • If not, they might still be able and willing to look up the historical stock price for you.
• Go online for historical stock prices
  • For example, view the historical section at Marketwatch or Nasdaq. It's generally acceptable to take the lowest and highest price from a given day and average them to arrive at a cost. It's also acceptable to use the closing price on the day of purchase.
  • These free services may not include events that affect basis, such as reinvested dividends, spin-offs, and stock splits.
• Go directly to the source
  • Many companies have an investor relations section on their website that contains historical stock data. You can also call the company's shareholder services department for help.
  • For shares purchased more than 10 years ago, go to a public library or law school library and look for back issues of newspapers, such as USA Today, to find the high and low price on the date of purchase.

[confusedrf]

Thanks al,

Dawn,

I know the month the stock was gifted, the number of shares and the value in whole that day. Let's say 181 shares at 22 each back in 1989.

I know the date of the Warner split, the number of shares, price etc. I know when I sold them as it appears on the 1099b...thought on two separate lines for some reason. Let's say the 18 shares  were at $16 each when spun off a year  and at $12 each when sold....made up but for illustration...I don't have the form with me at the moment.

I think the recent sale of Warner and the 1099 reflects the difference between the spin off date and sale date a year later and the cost basis reflects  those 2 dates and $. But since the Warner was a spin off of the gifted AT&T I think I need to adjust the cost basis.

If I have all this correct, I think i have the info I  need to determine the cost basis for the Warner sale...I am just not sure how to compute it. 

[Bsch4477]

The problem is that the cost basis of the stock is not the value when it was gifted. The cost basis is the cost basis of the one who made the gift. You are not going to know that. 

[confusedrf]

I hear you but i cant imagine someone who was gifted stock that perhps trippled in value over 30 years just puts in a basis of zero...

Neverthelss if i find out when my dad purchased them and let's say  Let's say theybwere bought at  bought at  $13 a share....knowing that... how would I calculate the basis.

[MonikaK1]

The cost basis of stock you received as a gift ("gifted stock") is determined by the giver's original cost basis (what they paid for it) and the fair market value (FMV) of the stock at the time you received the gift. If it's not possible to determine what was paid for it or the date it was purchased, the FMV at the time you received the gift may be the best estimate to use as the basis.

• If the FMV when you received the gift was more than the original cost basis, use the original cost basis when you sell. This is the most commonly encountered situation.
• If the FMV when you received the gift was less than the original basis, and you later sold the stock for:
  • More than the original basis: use the original basis.
  • More than the FMV at the time of the gift but less than the original basis: your selling price becomes the cost basis. You won't report a gain or loss in this situation.
  • Less than the FMV at the time of the gift: use the FMV at the time of the gift.

See this help article for more information from TurboTax on determining the basis of gifted stock.

See this help article for more information from TurboTax on determining the original purchase price. For example, view the historical section at Marketwatch or Nasdaq, or Yahoo Finance.