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I have a question about calculating profit for taxes after selling a stock, in the US. I have 20 shares of Microsoft stock that I bought a long time ago, probably in the late 80's. I have no idea what I paid for it originally. Over the years I've switched brokerage firms several times so I can't go back to where I first bought it and look, I don't remember which one it was and the place is probabaly out of business or been bought out by someone else by now. I've moved several times since then and so I don't have paper statements that old any more. If I sell this stock, how do I calculate profits for tax purposes without the original purchase price?

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    How may shares do you own now? Is it 20 now? Or was it a puchase of 20 shares then and you own more now? The reason that I'm asking is that there were several stock splits since then and that might affect the cost basis. JTP's answer was probably the easiest. Use a cost basis of zero if you don't want the mental gymnastic exercise of backtracking cost. Commented Apr 2, 2023 at 18:47

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1988 and earlier, the shares were below $0.50 after adjustment for splits. The difference between claiming a cost of $0 vs $1 is the long term gain on $20, which has $3 tax, maximum. I'd suggest using zero cost and 'various' under the purchase date field on the tax form. The time you'd spend to trace an actual cost is worth more than the potential dollar or two you might save.

To members reading this who may have a similar issue - check your brokerage account for cost basis on your holdings. Most brokers will let you add a date and price if they don't have it loaded. Better to address this before thinking about a sale.

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    If his narrowing down a date somehow gets him a cost of $1, the long term cap gain tax is on $20 less. At 15% tax rate, he’ll save or pay $3 difference (vs claiming a 0 cost). I did look at 1980 data. Much before ‘88, it was sub 50 cents, rounds to zero. Unless OP has a better specific date, my answer holds. Commented Apr 4, 2023 at 0:10
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    The word "tax" is missing from the sentence Robbie asked about. The (difference in) long term gain is not $3. The difference in tax is $3.
    – Ben Voigt
    Commented Apr 4, 2023 at 16:47
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    It's better for sure, although still phrased awkwardly. Also, I'm not 100% comfortable with your assumption that the tax differential is always simply the marginal rate times the difference in taxable income. There are still some income thresholds that result in step function changes in taxation. Someone who invested in Microsoft 40 years ago may well be retired today and concerned about triggering taxation of social security benefits (although being within $20 of that threshold in the first place is living very dangerously).
    – Ben Voigt
    Commented Apr 4, 2023 at 20:05
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    @BenVoigt The volatility in today's MSFT stock price will easily exceed $1/share (0.3%), so it is a moot point.
    – user71659
    Commented Apr 4, 2023 at 22:13
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    @user71659: "Not anytime soon" is indeed a possible outcome when you choose the price and let the market choose the timing.
    – Ben Voigt
    Commented Apr 4, 2023 at 22:45
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For some international perspective, in Finland the tax authority has a "deemed acquisition cost" policy they use if you don't provide the purchase price. If you have owned the stock for less than 10 years the assumption is 20% of the sale price, otherwise it's 40%. If the actual cost is known, they'll use whichever is better for the taxpayer.

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