How do I report a sale of stock when I don know the cost basis or purchase price of the original shares?
Clearly, my clients aren’t the only ones asking. In a recent report (PDF file), the Government Accountability Office (GAO) stated that about 38% of the taxpayers reporting stock sales on their 2001 returns incorrectly reported their gain or loss on the sale. Roughly two-thirds of taxpayers underreported capital gains in securities sales, while roughly one-third overreported, according to the GAO. The report comes amid Internal Revenue Service estimates that taxpayers’ errors in calculating capital gains and losses — or just plain cheating — led to a $17 billion gap in the collection of taxes due. The IRS has said the total tax gap is $290 billion, primarily from small businesses and independent contractors whose taxes aren’t withheld from their paychecks. Sen. Evan Bayh (D-Ind.) introduced the START (Simplification Through Additional Reporting Tax) Act in March of this year. The START Act would require brokerage houses and mutual fund companies to track and report to both taxpayers a
Related Questions
- I know the basis of stock includes the cost of the original purchase, but does it also include the value of stock acquired through a dividend reinvestment plan?
- How do I calculate the cost basis of the shares that have split and are later sold from my employee stock purchase plan?
- How do I report a sale of stock when I don know the cost basis or purchase price of the original shares?
