Noncovered transactions - adjusted cost basis

Looking at my investment tax state and see where IRS legislation requirements for noncovered cost basis is different from that of covered transactions. From my investment firm...

"Any sale of a security that is considered a noncovered security will still be included in the investment reporting section with the adjusted cost basis (where available) but the adjusted basis will not be transmitted to the IRS."

My fund was transferred from an estate so the cost basis was that immediatedly following the date of death. My question is if there is no requirement to report the cost basis to the IRS then do I report any captial gain from these assets liquidated during the tax reporting year ? If so, what cost basis can I use to minimize the capital gain ? If this information is not sent from the investment firm then the cost basis would solely come from me ?
  • This is for non cash donations i need to know what cost/asjusted basis means
You still are required to report the capital gain to the IRS, even if the cost basis is not being reported to them.  As you correctly pointed out, the cost basis is the FMV of the security or securities on the date of death.  You are responsible for reporting the cost basis (the investment firm will still provide the 1099-b to the IRS).  You have no choice but to report the correct cost basis, so there is no concept of a basis that can minimize the capital gain, it is what it is.  It is precisely because people were underreporting cost bases that Congress implemented the new rules regarding covered securities; brokerage firms are required to track cost bases now. 
  • Is just the sale of the proceeds sent to the IRS and not the capital gain since the cost basis is not sent to the IRS ?
  • No, otherwise, they will assume a cost basis of zero.  As I mentioned in my answer, you are responsible for reporting the cost basis accurately.
  • If I don't know when the securities were purchased, how am I supposed to determine the cost basis? I don't understand why the broker wouldn't have this information.
  • call the  broker or customer service number for your relative's securities fund, because sometimes they have the cost basis information, but it is not reported in whatever current system their brokerage is using. Not always, but sometimes. For instance, your grandmother's broker might have the old records because he/she wants to be able to help their customers, even though their brokerage might have merged with another one and be using a new system. Also, if the brokerage/account is the way your relative purchased the shares, they _should_ have the original purchase info.
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