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14 votes

What is my cost basis for an old computer given to me by a client when they upgrade?

Trace the transaction. At the start you had no computer and no cash; and in the end you had no computer and $400. Therefore the gain is $400... Unless you gave them a price break on the service - ...
mhoran_psprep's user avatar
12 votes

401(k) cost basis

Unless you made after tax contributions your basis is zero and all distributions are taxable income. If the cost basis is unknown it would be treated as if it were zero. Relatively few 401(k) plans ...
T. M.'s user avatar
  • 1,523
11 votes

Gift house to parent then inherit it back to increase basis?

Even if the math works out there are risks: The IRS could do an audit and determine it was designed to avoid tax. They would be concerned that the conditions put on the gift don't make it a gift. As ...
mhoran_psprep's user avatar
8 votes
Accepted

How is peer-to-peer lending taxed in the US?

You should receive tax forms such as 1099-OID (for interest) and 1099-B (for charge-offs). Apparently, in contrast to traditional bonds with "coupon" interest payments reported on 1099-INT and ...
nanoman's user avatar
  • 29.7k
8 votes
Accepted

What happens to the cost basis when property declines in value between its purchase and the death of its purchaser?

The term "stepped up basis" is kind of a misnomer because as you point out, basis can go both up and down, meaning essentially basis is just "reset". This means you're better off selling losing stocks ...
TTT's user avatar
  • 47.2k
8 votes
Accepted

Can tools/equipment be counted towards my home's cost basis?

No, tools cannot be added to the basis of your home. Tools are separate assets and have their own basis. They're not attached your home, their utility is not tied to your home or limited by it, and ...
littleadv's user avatar
  • 176k
7 votes

Buying stocks at one price then buying more at a higher price

All 200 shares are worth whatever you can find somebody willing to buy them for. If you're talking about a highly liquid stock with plenty of buyers and sellers, that's usually somewhere close to the ...
Craig W's user avatar
  • 15.9k
7 votes
Accepted

Stock split's effect on cost basis (2:1 split, US)

You bought 10 shares for $10 each, cost basis of $100. Your shares have done well and today the shares are worth $50 each, your position is worth $500. The company does a two for one split (2:1). ...
quid's user avatar
  • 49k
7 votes

Short term tax or long term tax on non retirement mutual funds

If your broker tracks individual lots for this mutual fund, you should be able to identify specific lot you want to liquidate and depending on when you opened the position, you'll know if it is a ...
littleadv's user avatar
  • 176k
7 votes
Accepted

What is the law/regulation which prohibits brokers from reporting basis on RSUs?

These are "noncovered" securities. The regulations require the brokers to report the price of acquisition (the "award" price), but not the price of recognition (the taxable value ...
littleadv's user avatar
  • 176k
7 votes

I accidentally sold all of my Bitcoin with a limit order because I had never done one before

If the cost basis was $52,000 a coin and you sold it for $70,000 a coin that means your tax agency will be expecting you to pay taxes on the $18,000 a coin in gains. You will have to check the ...
mhoran_psprep's user avatar
6 votes
Accepted

Why is RSU tax basis based on remaining shares after shares are witheld?

You only got 75 shares, so your basis is the fair market value of the stock as of the vesting date times the number of shares you got: $20*75. Functionally, it's the same thing as if your employer ...
Zach Lipton's user avatar
  • 1,097
6 votes
Accepted

How do I determine if sale proceeds from an asset are taxable?

If it's fully expensed, it has zero basis. Any sale is taxable, 100%. To the ordinary income / cap gain issue raised in comment - It's a cap gain, but I believe, as with real estate, special rates ...
JTP - Apologise to Monica's user avatar
6 votes

401(k) cost basis

Cost basis doesn't matter because all distributions are: taxable in traditional retirement accounts. non-taxable in roth accounts. Contributions are relevant to roth accounts because you can take ...
quid's user avatar
  • 49k
6 votes

Can I include the costs incurred for adding landscaping to the cost basis of my house?

You included a bunch of items in your question: I've read that expenses for improvements that add value to the property, prolong its useful life can get added to cost basis, such as adding a room, ...
mhoran_psprep's user avatar
5 votes
Accepted

1099-B, box 5, how to figure out cost basis?

For every document that the IRS posts, there will be a correlating instructions page. This would be the instructions for the 1099-B, here. Furthermore, as you will be reporting this on Form 8949, as a ...
Liam's user avatar
  • 1,096
5 votes

How do I determine if sale proceeds from an asset are taxable?

Profit = Sale price - Basis Basis = Purchase price - any depreciation taken, including expensing it.
Loren Pechtel's user avatar
5 votes
Accepted

When two valid methods used to determine step-up in value at death for real estate differ, can one freely choose the most advantageous?

From IRS Pub 559 Survivors, Executors, and Administrators Basis of Inherited Property: The FMV of the property on the date of the individual's death. The FMV on the alternate valuation date (...
Morrison Chang's user avatar
5 votes
Accepted

How figure out cost basis when the same asset is located in different brokerage accounts?

Ameritrade is going to report the purchase of 10 shares at $70 and the sale of 10 shares at $80 to the IRS. You cannot designate that the shares sold in your Ameritrade account were from your ...
Bob Baerker's user avatar
  • 76.7k
4 votes

How to calculate weighted average cost while taking into account both buys and sells?

Option A is correct. You need to account for the sells as a negative amount/price. Adding your sells makes no sense if you're wanting net average transaction costs. Think about it this way - if you ...
D Stanley's user avatar
  • 136k
4 votes
Accepted

Why is the cost basis reported by a broker on RSUs 0 USD?

This is typical for RSU vesting, because you didn't buy the stock through the broker. Fidelity and Vanguard do this too. Just fill out your Form 8949 or Schedule D and adjust the basis to the actual ...
Ross Patterson's user avatar
4 votes

401(k) cost basis

A 401(k) plan is a qualified retirement plan. This means that as long as you follow all the rules and only roll funds to other qualified retirement plans, you don't need to worry about the cost basis ...
NL - Apologize to Monica's user avatar
4 votes

Traditional IRA with No Deduction Allowed

Based on the key parts of the question: A. Martha doesn't have a retirement plan at work. B. Martha makes too much to deduct the traditional IRA contribution C. Martha makes too much money to ...
mhoran_psprep's user avatar
4 votes
Accepted

Wash-sale Cost Basis Adjustment question

Wash sale accounting doesn't change the amount of the gains or losses, just possibly when you can claim them. Buy at $20, sell at $12 is an $8 loss and buy at $13 and sell at $14 is a $1 gain - for a ...
Bob Baerker's user avatar
  • 76.7k
4 votes
Accepted

Can I select lots for exercised covered calls on transferred shares where I'm tracking the cost basis?

When you sell shares (no options involved): If you plan to use any method besides FIFO, including LIFO, you must specifically direct your broker as to which shares to sell so that your taxes end up ...
Bob Baerker's user avatar
  • 76.7k
4 votes
Accepted

Could trading mutual funds be less expensive than ETFs?

You don't trade a (non-ETF) mutual fund in the sense that your broker posts (on your behalf) a buy order with a (maximum) price per share that you are willing to pay (bid) or a sell order with a (...
Dilip Sarwate's user avatar
3 votes

How to calculate weighted average cost while taking into account both buys and sells?

I know when I was first building out my personal spreadsheets it was really helpful to think of what is literally happening rather than looking at the data. If you buy 10 of something for $20. Then ...
quid's user avatar
  • 49k
3 votes
Accepted

Is a mutual fund sale eligible for a step-up in basis when spouse dies

IRS Publication 551 "Basis of assets" says there may be a step up of the entire basis (not just half). When either spouse dies, the total value of the community property, even the part belonging ...
perimpossible's user avatar
3 votes
Accepted

If you a sell a percentage of your holdings in a fund and specify the average cost basis, can you later select another method when you sell again?

You cannot change from the average cost method to the specific shares method (but switching in the other direction is OK). If you are planning on withdrawing $3000 this year and using the average cost ...
Dilip Sarwate's user avatar
3 votes
Accepted

What cost basis do I report on the 1099?

You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You ...
Brythan's user avatar
  • 21k

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