Reply To: Can I Determine Cost Basis differently than my discount brokerage

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#8018
ElroyTax
Participant

Thanks for your responses. Since posting the question yesterday I have learned an additional bit of information which is likely helpful. The shares which were accidentally sold were all purchased before Jan 1st, 2011. As a result, my brokerage will NOT report the cost basis to the IRS, I believe it will be up to me to report the cost basis. I’ll have to wait until I receive the 1099 to make sure that the broker does not report the cost basis, but information on the broker’s web site indicates they DO NOT report to the IRS the cost basis for shares purchased before Jan 1st, 2011. So now the question becomes….if I choose to report the 2020 day trade purchase as the cost basis, and ignore the pre-2011 purchase, is there any tax problem with that approach? I will have something like buying 1,000 shares of stock XYZ on March 12th, 2020 for $$30,000, and selling the same shares on March 12th, 2020 for $30,100. Both of those March 12th 2020 trades are verifiable in the account statements. And I will have the same number of shares that I have had since pre-2011 with a cost basis of about $3 still in the account. Since the broker will not report the cost basis of the trade, am I free to choose any lot which I like when I report, as long as I only choose each lot only once during the entire holding period?

  • This reply was modified 11 months, 1 week ago by ElroyTax.