Stock basis problem

[joepar2567]

My 83 old Mother-in-law has 131 shares of stock worth $ 63 a share from her husband from the 50's and 60's. She has no record of the purchase prices. What will her tax liability be if we can not determine her basis? she only makes about $15,000 a year, 95% from social security. She lives in Maryland.

 

[abezon]

Was she given the stock by her husband or did she inherit it when he died? If she was given the stock, she needs to backtrack her through the splits to figure out how many shares were originally purchased. Then she can take the basis from when the stock was purchased. At the very least, she is entitled to the lowest trading price the stock had during the period her husband could have bought it.

Did he buy from the company? Through a broker? They might be able to find some records.

If she inherited the stock, her basis is its fair market value on the day he died. The library can look up the price on that day with their reference materials. Again, you'll have to account for any splits since inheritance.

 

[joepar2567]

She inherited the stock in 1969, so I sould be able to figure the basis from then. The stock is an electric utility and it does not appear to have split.

Thanks for you help

 

[abezon]

One thing to check -- has she been receiving the dividends or have they been reinvested every year? She should have a 1099-DIV from 2002 for dividends paid on the utility stock. That money was included on her 2002 tax return whether she received it or not. If it was reinvested, she should include all the reinvested dividends in her basis. You can call the issuer of the 1099-DIV to find out if she gets cash or more shares. They might even be able to give you total reinvestment since 1969. Otherwise, you can get dividend info from the library.

In general, if she has 169.000 shares, there were probably no reinvestments. If she has 169.374 shares, she probably has reinvested dividends.