[EliaNG]

Folks,

I have completed all of our Federal tax filing complete except for one item - the cost basis for a UGMA mutual fund I sold last year. I was given the UGMA mutual fund as a child, and did nothing with it (other than paying taxes on short and long term gains on it once turning 18) each year until (a) converting it into my sole account in 2006 and then (b) cashing it all in in 2009. I have contacted the company of the mutual fund and they claim they don't have any records back past 1998. After speaking with the mutual fund company they said they would send my all of the records that they had (which from the discussion sound very incomplete); that was three weeks ago and I have not yet received it.

For reference I'm 47 and was given the gift from my grandfather back in the 1960s.

Do I file for an extension while waiting? The total value of the mutual fund wasn't huge (~$4000), but the cost basis will change the amount of taxes we owe. This is the one major tax obligation we have...

Any suggestions or help would be very appreciated. Thanks in advance.

[ebaines]

As I suppose you are aware, your cost basis in the fund would be equal to the original amount invested by your grandfather back in the 60's, plus the total of all amounts that were reinvested fro you over the past 40 years. Obviously a daunting task. I would suggest that you talk with your parents to see if they kept any records - as you were growing up they would have received annual statements on your behalf, and (perhaps) even filed income tax statements that would have included distribution information. The only other suggestion I can make is this - even though the mutual fund doesn't have your particular records prior to 1988, you can probably find information on distributions made by the fund per share back to the 60's - check the mutual fund web site, or Yahoo finance. Then you should be a able to construct a spread sheet that would calculate how much your reinvested distributions would have been each year from the 60's to today. It's a bit or work, and may not be perfect, but it would at least show that you tried your best.

For now you can file an extension, but you'll have to make an "educated guess" as to the fund's cost basis since any taxes owed must be paid by April 15.

[EliaNG]

ebaines,

Would the amounts reinvested include dividends and capital gains (long and short term)? Or just one or two of those? I've obtained the dividend and capital gain data from my past federal tax submittals. Now I just have to get the pre-1986 data.

Thanks in advance.

[ebaines]

It depends how your grandfather and/or parents managed the account. The custodian had the option of taking all distributions in cash (no reinvestment at all), or reinvesting just capital gain distributions while taking dividends in cash, or reinvesting just dividends while taking captal gains in cash, or reinvesting both. It's likely (though not guarranteed) that whatever option was in effect after you turned 18 (which presumably you know) MAY have been the option that was in effect from the beginning.

Good luck with this. Again - can you talk to your parents? They may be of some help here.

[EliaNG]

ebaines,

I went back through all of the records I have, dating back to 1985, and all of the dividends and capital gains were reinvested. With just that portion of the data (~ 25 of 41 years) I show a loss for the sale.

I spoke with my dad and he does not have any of the old data; he only has tax returns going back into the 1990s.

I also spoke with the fund company, whom I had called on March 15, 2010, requesting all past annual statements. They completely dropped the ball (and without naming names - they are one of the big investment / mutual fund houses). They had record of my request; it was never executed. So they are now (!) going to compile that historical data, but it will take weeks/months to do because of how close the date is to April 15th, and because this request entails retrieving paper copies and copying/duplicating them, and then mailing them to me. Grrrrrr.

So... Since I can show a loss, with the data I have on hand, that is what I'm putting down on my taxes. I could put down the current calculated taxes owed on the extension form, and then file once I have the entire set of data (assuming the firm doesn't blow off my request again), showing a slightly lower tax owed, thus getting a slight refund (since I will have paid the higher amound with the extension form). I don't think it will be a significant delta, so I might just go with what I have now.

[ebaines]

Sounds like a good plan. As you say - it's good to slightly overpay now with your filing of the extension, so you get a bit of a refund later when you finalize your 1040. That way you won't get hit with an interest payment due later on. Good luck!