I’m trying to make productive use of the slack time we have while waiting for the IRS to release the lien on the house we’re buying…however, I’m experiencing a different kind of IRS torture – working on our federal tax returns! I’ve done our returns for several years and it’s not too bad, but our finances have been pretty simple.
However, last year we sold some stock to purchase our lot in Tarpon Springs, and getting all the information together is going to be a real doozie. To get the capital gains, we have to take the sales price minus the cost basis. Of course, the sales price is the easy part…I’m just trying to wrap my brain around what I need to do to calculate the cost basis.
You may think, heck, the cost basis is easy – what did you pay for the stock? Well, I acquired the stock through the IBM Employee Stock Purchase Plan during my 16 years of working there, from 1977-1993. You could use a payroll deduction to buy shares…so for every paycheck, if you had withheld enough, you purchased one or more shares. If I had been a fastidious record-keeper, I might have all the purchase prices on file somewhere, but — I am NOT a fastidious record-keeper.
Not only will I need to know the purchase price for each share I purchased while I worked at IBM, but there have been 3 stock splits that I will need to adjust the share prices for, plus at some point, I decided to use the Dividend Reinvestment Plan to purchase additional shares. Also, we didn’t sell all of our shares, so I will need to use the FIFO method to figure out which shares we sold and make sure I use the prices for those.
So, if at some point during the coming week or two, you see a big mushroom cloud in the skies over Tampa Bay, you will know that my head finally exploded in a mass of nuclear fission.