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Old 11-23-2012, 05:53 PM
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Computing basis over multiple year/weekly stock purchases

Guru,

What is your process for computing basis on a UTMA gift of stock, when it is sold, when the giver of the stock had thousands of purchases over 40 years of this same stock. I know the givers basis is transfered with the gift(grandma to niece with nieces dad as custodian). I believe a reasonable calculation is required and a large portion of the gain will be taxed at 0% for 2012 as the niece makes very little and is going to college. She will qualify for the Amer. Opp credit if she claims herself, but her parents AGI will prevent any benefit to them if they claim her. Justifiable arguements can be made for each party to claim the personal exemption. I am going to go back 5 years from the date of the gift and use that stock quote. Do you see any problems with this route? Grandma has given all members of her family gifts of this stock, and sold blocks multiple times so tracking in any way would be impossible. The total proceeds are only $3900 so my thoughts are low basis is a good answer but she will have California tax to pay. Your thoughts.
Thanks!



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Old 11-26-2012, 09:39 AM
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OK seems like I'm on my own on this one. As many of you know this has been a consistent problem for tax accountants that the IRS is trying to address. A 100% gain on this sale is the safest way, but I want fair not safe. Grandma paid something for these shares so I am going to lowball the basis, to be safe and fair. It's the state tax I am concerned with.(California)



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