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Cost Basis Advisory Accts Transfered In..HELP

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May 7, 2008 11:04 pm

Help me.  Two sitituations.  Maybe I’m overthinking this   Stocks aren’t that hard, but I’m getting brain farts when I think about mutual funds.

  1.)I have some accounts that have transfered into me from other brokerage companies.  I need to input the cost basis information but the information needs to be broked down into the original cost basis and number of shares purchased, current cost basis with reinvested dividends as of the time of transfer.  But the statements that the clients have are not giving me this information and some of the funds have been held for a very long time.  We all know how meticulous the clients themselves are in keeping records.  NOT.      example:   xyz fund        XXXX shares  (transfered in)      amount invested $15,000       cost basis 20,5000     Market value  28,750   Doesn't say when they purchased or if it was multiple purchases and of course the client can't find their original confirms since the fund was also previously transfered from the fund family to the previous broker.   How would you guys enter this cost basis info for your systems?? Enter it as if the client purchased it when transfered in using the 20,500 cost basis and that # of shares transfered in??   2.  Stock certs the clients have brought in that were issued out to them sometime after their initial purchase.      Example:  Client purchases private company stock in 1970.  Stock goes public and they    get a cert in 1980. Plus when the stocks split they get additional certs.  Brings in a wad of stocks and of course can't remember what the initial amount was they bought. And they also have some transfer agent held shares for the same company aftet they quit issuing stock certificates on splits.  I know we can figure out the cost basis of the splits etc.  But what do you do about the original amount.   I know..... I have old clients.  Old and rich.    I once had a client bring me a brown grocery bag full of stock certificates.  Some of the companies had been bought and sold multiple times.  My back office hates me.   Seriously.  Am I over thinking this? or is it close enough like horseshoes and handgrenades for they older holdings.
May 7, 2008 11:18 pm

Two suggestions for the MFs

  Call and ask the old firm for it. If they were level 4 funds (most older funds were) call and ask the fund family. Otherwise if you know the original cost basis, look at 1099's for each year held and you can figure the cost basis out manually, but this will take some time.
May 9, 2008 6:29 pm

When I discussed one of these messy accounts a few years ago with an accountant with 30+ years of experience, he told me to just take a guess.  My understanding is that it is no easier for the IRS to figure out than for us, so the reality is that if you are in the ballpark, your odds of having it be challenged are pretty slim.

  I'm not an accountant, so if anyone has other experience, please chime in.
May 9, 2008 7:10 pm

I’ve had accountants tell me the same thing.  They look for numbers that make sense.  You tell them you’ve held fund xyz for 20 years and there were no cap gains, they’re going to question you.  So, make a best guess and let them come back at you if they decide to get picky.