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?
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.
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.