Sunday, February 16, 2014
Wall Street Journal Tax Report: How to Figure Out Your Cost Basis, by Laura Saunders:
Did you sell an investment held in a taxable account last year? If so, prepare for a struggle—or at least a brush—with a crucial but confusing area of the tax code. It goes by the name "cost basis," and it is the starting point for measuring profit or loss on the sale of an investment, whether it is a stock, bond, house, artwork or other asset. Many investors find it baffling. ...
Experts say the IRS rarely questions or audits cost-basis data, except in abusive tax shelters. To help the confused and discourage cheating, Congress passed a law in 2008 requiring financial firms to track cost basis for certain assets and report it both to customers and the IRS after a sale.
In the short run, these rules might add to taxpayers' confusion while they phase in. For now, they cover some assets but not others. If you are facing a cost-basis conundrum, here are some tips: ...