Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
Who's cost basis correct: mine or transfer agent's?
Posted by: Sasha, February 21, 2017 12:10AM
Hello,

I'd like to understand who calculated the correct cost basis and I hope somebody can help me with that.

I'm reviewing 1099-B's of two DRIP's I sold last year. They both say that Computershare reported to the IRS as net proceeds. What I disagree with is the cost basis of the sold stocks. Can I check somewhere on 8949 form (or Schedule D) to tell the IRS that I'm reporting my way which I deem to be correct? Or am I supposed to follow Computershare's lead?

1. Neither of the two 1099-B's show that I paid a batch fee and the processing fees per share to sell the whole positions. Shouldn't they be included in the cost basis?

2. One DRIP didn't charge fees to make monthly investments, but the company paid them (perhaps 8 pennies per share). So they were included in my dividends each year (e.g.I reinvested $100 of dividends, but my 1099-DIV showed $105 instead). As I sold the shares, the 5 dollars can be included in the cost basis, right? I think Computershare's provided detail shows it, but I want to double confirm that it's correct.

3. The other DRIP I sold didn't pay any fees on my behalf. I did. I invested monthly, and Computershare charged the following fees:
Ongoing Automatic Investment Fee - $1
Purchase Processing Fee (per share) - $0.03
An example of one monthly investment:
I sent $250 and Computershare purchased 2.98 shares @$83.527 (=$248.91)

1099-B detail shows my cost basis as $249, not $250. Shouldn't it be $250?

Thank you.


Re: Who's cost basis correct: mine or transfer agent's?
Posted by: kaneohe, February 21, 2017 03:07AM
If Computershare is reporting net proceeds, I am interpreting that as meaning that sales proceeds are report net of fees/costs. If that is true,then the only fees you should be concerned about are the fees/cost for purchases. If Compputershare doesn't have the purchase fees in the basis, you can adjust the basis in col. g of the 8949 along w/ the appropriate code in col.f to make the gain correct.

Re: Who's cost basis correct: mine or transfer agent's?
Posted by: Sasha, February 21, 2017 04:50PM
Thanks for a quick response.
Well, yes, it says on 1099-B that it's reporting as Net Proceeds, but it's not really true IMO. I don't have the 1099-B in front of me, but as an example: it sold for $2,530, but I got only $2,500 which is not net. I think I can adjust this on the Form 8949. I'll read instructions of this form to locate the correct code to adjust it.
Brokerages are very straightforward (TradeKing and Capital One) and their provided 1099-B's match my calculations, but not TA's apparently :-(.

Thanks again.

Re: Who's cost basis correct: mine or transfer agent's?
Posted by: kaneohe, February 22, 2017 06:06PM
[www.irs.gov]

Are these covered or non-covered shares? See the chart on p.7 on how to report . If covered, you report the broker basis reported on 1099-B in the basis column and then make adjustments in the adjustment column with code B.

If non-covered and broker reports basis to you but not to IRS, you report your (assumed correct)basis in the basis column w/ adjustment 0 and code B. This presumably tells IRS who didn't get broker's basis that you disagreed w/ broker's basis . Don't know what color that flag is.

Re: Who's cost basis correct: mine or transfer agent's?
Posted by: Sasha, February 23, 2017 01:50AM
These were all covered shares. Thanks for posting the resource. I already checked on the IRS website in the morning and it looks like the code for me to use is B.

This thread now isn't as concerning as the one I'll post in a minute also about 1099-B of a different company but was managed by the same TA.

PS.Oh BTW, I misspoke in my earlier post.
Yes, the Computershare did include the sales charges when it showed the Net Proceeds on the 1099-B's (I had to add the ST & LT proceeds instead of reading CS verbiage). So, the only thing is missing is that my cost basis wasn't adjusted by my purchasing fees and the fees paid by the company on which I paid taxes (as they were included in 1099-DIV).
Would you agree that the best code of my adjustment on 8949 is B?

Thank you.

Re: Who's cost basis correct: mine or transfer agent's?
Posted by: kaneohe, February 23, 2017 02:26AM
yes, code B looks right.

Re: Who's cost basis correct: mine or transfer agent's?
Posted by: Sasha, February 23, 2017 12:55PM
I appreciate your help, Kaneohe.



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