You must purchase stocks and bonds through a company or brokerage account, which means there is a paper trail associated with the purchase. That means even if you have no idea what the cost basis it, you can generally find out by viewing the appropriate records. Your cost basis for a stock or bond is your purchase price, plus any commissions and fees associated with the purchase. The exception is inherited or employer stock purchase plans.
Contact the company, bank or online brokerage account and ask for the total purchase price of the stock or bond, including associated fees, and the number of shares. Divide the total price by the number of shares to calculate per-share cost basis. If they only tell you the per-share purchase price, multiply this number by the number of shares and add any commissions to calculate your total cost basis.
Look up the fair market price at a decedent's date of death for inherited stocks and bonds. Alternatively, the executor of a will may elect to use a date six months after the decedent's date of death to serve as the cost basis. The historical prices can be found on financial websites, such as CNN Money, Yahoo Finance or Google Finance. If the decedent died in 2010, the cost basis is his original cost basis, which can be found by assessing his brokerage or bank records.
Add the discount stock or bond's income from your W-2 form to your purchase price to calculate the cost basis employee stock purchase plans. These plans usually offer stock at a discount up to 15 percent. The difference between the purchase price and the fair market value is income, on which you pay income tax. To avoid paying double taxes on this amount, add this income portion to the purchase price, which brings your cost basis up to fair market value at the time of purchase. As an example, If you purchased a $100 stock for $85, then you have $15 in income, but your cost basis is $100.
- IRS.gov: Cost Basis
- JL Franklin Wealth Planning: Employee Stock Purchase Plans
- Internal Revenue Service (IRS). "Topic No. 409 Capital Gains and Losses." Accessed Mar. 22, 2020.
- Internal Revenue Service (IRS). "Cost Basis Reporting FAQs." Accessed Mar. 22, 2020.
- Internal Revenue Service (IRS). "Publication 550 (2018) Investment Income and Expenses (Including Capital Gains and Losses)," Page 43. Accessed Mar. 22, 2020.
- Wolters Kluwer Financial Services. "Capital Changes." Accessed Mar. 22, 2020.
- U.S. Securities and Exchange Commission. "Form S-4." Accessed Mar. 22, 2020.
- U.S. Securities and Exchange Commission. "Bankruptcy: What Happens When Public Companies Go Bankrupt." Accessed Mar. 22, 2020.
- Charles Schwab. "How Do You Value a Gift of Stock? It Depends on Whether You're the Giver or the Receiver." Accessed Mar. 22, 2020.
C. Taylor embarked on a professional writing career in 2009 and frequently writes about technology, science, business, finance, martial arts and the great outdoors. He writes for both online and offline publications, including the Journal of Asian Martial Arts, Samsung, Radio Shack, Motley Fool, Chron, Synonym and more. He received a Master of Science degree in wildlife biology from Clemson University and a Bachelor of Arts in biological sciences at College of Charleston. He also holds minors in statistics, physics and visual arts.