Quote:
Originally Posted by blueash
I am sure you know a WHOLE LOT more than I do about finance. I don't sign off as finance guy. But your advice on calculation of basis for inherited stock is per Mr Google wrong, and contrary to what I recalled being told when I dealt with an estate.
The correct technique seems not to pick the highest selling price of the date of death which would raise the basis and lower the gain, but rather you are to take the average of the highest and the lowest cost for the date of death, or if the death was on a holiday, calculate that figure for the open market day before and after the death.
google search using "How to determine a stock's date of death value" has many hits giving this averaging requirement. I found none saying use the biggest number you can find. I did not see any hits to an IRS paper on the issue and perhaps they have not expressed an opinion. But if no opinion why do all the financial websites suggest the same averaging? |
There are technical rules, and then there is practicality. Given that in most cases, the difference will be a dollar a share or less, the impact on taxes paid / owed will not be significantly questionable for an auditor to flag the issue as an audit issue for the average middle class non professional.
Since the filer is non considered a professional financial licensed and regulated individual, we are not held to the same standard of performance as a brokerage or a CPA, whose license can be at risk. That quote and level of performance is provided to the audience to which the professional and licensed individuals are held. Since the brokerage does not have a cost, its up to the individual.
The more typical scenario is a very long term hold of a dividend reinvested share purchased sale. There are 4 purchases a year with tiny amounts of shares over time, and to further complicate, can be a distribution from an ESOP, which my Wife has, and I have as well. The IRS requires a cost, with the option of various dates. The question is: how accurate will you be for records that may have been lost in the last 40 years. I have exxon stock which i purchased in 1981, dividends reinvested over X years with splits. I will do the best estimate I can if the custodian of the dividend reinvestment program can't provide the cost basis for me.
So here's the essence of my reply: there is always a grey area of what's an acceptable difference in quality between a professional and a non professional. There are differences in personality types for the level of judgmental, Briggs Myers ***J or fourth position, which is presented in the adherence to rules based logic and laws and black and white, binary decision making, as a generalization.
I am not a J, i am a P, or perceiver, and as such, look at all rules as not as absolutes, but as guidelines and if you aren't qualified as a professional you have some lee way in the quality of your work.
And finance is all about the future, and valuations done not based in past accounting, but in the future cash flows and growth projections from today. Totally subjective as the the future is always uncertain. If i signed off as CPA guy, or CFP guy, then i would be licensed and have a different level of care than a non professional.
does that explain the source of my response?
and your MB type must end in J, correct?