Cost basis of stock lot changed when stock sold

funkws
funkws Member ✭✭
edited April 9 in Investing (Windows)
I sold a long-term holding last year and noticed the report from my broker did not match the tax report for Schedule D from Quicken. Even the short term reinvested transactions show a different cost basis than the broker's 1099, or even Quicken's view by lot when I use the account overview with a earlier date. (The gross proceeds and shares do match.) I ran the utility to validate the file, but nothing changed. I also looked for hidden transactions, but did not find any. I am using the current Premier version. Any thing I can try to fix this? I have over 20 years of reinvested dividends to work through.

Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    Assuming the cost basis of the holding was correct prior to the sale, the implication is the brokerage used a different cost basis method for the sale than entered in Quicken.  For example, if the security is a mutual fund, the brokerage may have use average cost.  You may want to review: https://www.investopedia.com/terms/c/costbasis.asp
  • NotACPA
    NotACPA SuperUser ✭✭✭✭✭
    Unless you instructed you broker otherwise, at the time of the sale, the brokerage almost certainly used FIFO in selecting the lots to sell.
    If you did NOT also select FIFO, then your Cost Basis numbers are sure to be different than your broker's.
    Since the brokerage is reporting their numbers to the IRS, you can either:
    1. Go back and correct EVERY sale of this security since you first bought it, or
    2. Just accept the brokerages figures.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser ✭✭✭✭✭
    If I understand correctly, setting Quicken to display holdings as of an earlier date shows correct data. Is this right? If so, some data damage may have occurred. Did you try the investing repair options in the Validate & Repair dialog? In order of gentleness, some things to try are
    1. Recalculate the transactions in the investment register by pressing CTRL-Z.
    2. Rebuild investing lots via File > Validate & Repair. No need to check Validate File if you've already done that.
    3. Repair investing price history via File > Validate & Repair.
    4. Delete and rebuild price history via File > Validate & Repair.
    Backup your data file before doing these.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • funkws
    funkws Member ✭✭
    Thanks for the replies, but I guess I did not provide an example to clarify what is happening. Quicken records the cost of each lot as obtained. The broker also reports the sale by lot at time of sale - so there is a 1 for 1 match by lot. This information shows up on the 1099, which also divides the lots by holding period. In the case I am trying to describe, I have one lot January 2021 which was a dividend reinvestment of $3.78. Quick carries the lot at that cost. However, since the entire holding was sold 2 months later, this is a short term sale with no transactions between the purchase and the sale. Quicken reports a new cost basis for the lot, while the broker reports the original cost. I looked at lots on Quicken with similar sizes, and they have significantly different cost bases, so I am assuming both Quick and the broker are not using average costs. Bottom line is I can go with the broker on all covered lots, but I need some way to provide evidence of bases for the uncovered lots.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 6
    funkws said:
    Thanks for the replies, but I guess I did not provide an example to clarify what is happening. Quicken records the cost of each lot as obtained. The broker also reports the sale by lot at time of sale - so there is a 1 for 1 match by lot. This information shows up on the 1099, which also divides the lots by holding period. In the case I am trying to describe, I have one lot January 2021 which was a dividend reinvestment of $3.78. Quick carries the lot at that cost. However, since the entire holding was sold 2 months later, this is a short term sale with no transactions between the purchase and the sale. Quicken reports a new cost basis for the lot, while the broker reports the original cost. I looked at lots on Quicken with similar sizes, and they have significantly different cost bases, so I am assuming both Quick and the broker are not using average costs. Bottom line is I can go with the broker on all covered lots, but I need some way to provide evidence of bases for the uncovered lots.
    Based upon your description, I suspect Quicken may be using average cost and the brokerage is not.  I suggest you uncheck Use Average Cost on the Edit Security Details window for the mutual fund security.
  • funkws
    funkws Member ✭✭
    Thanks for the suggestion, but this is a common stock, not a fund. The edit security details shows "Average cost per share" as "N/A" (can't update it).
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    "but I need some way to provide evidence of bases for the uncovered lots."
    Did the broker actually know the basis and include the basis on the 1099-B, but reported the lot as "uncovered?"
    How was this traded entered in Quicken?  If the day before the sale all lots were in complete agreement with what the broker showed as the bases, it would seem that a manual entry where you selected the individual lots sold should agree precisely with the 1099-B.  Have you had any wash sale losses along the way that could be affecting what you're seeing?
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    funkws said:
    Thanks for the suggestion, but this is a common stock, not a fund. The edit security details shows "Average cost per share" as "N/A" (can't update it).
    Interesting...  Please provide a screen capture of the Edit Security Details window.
  • funkws
    funkws Member ✭✭
    Screenshot attached
  • funkws
    funkws Member ✭✭
    For Mr. Young - Quick shows a comment regarding possible wash sales - so that may impact something. However, this is a stock I accumulated and sold it all in a single transaction. All of the short term lots were at a gain, the long term lots are a mixture.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser ✭✭✭✭✭
    edited March 6
    funkws said:
    Screenshot attached
    That display is normal. Average cost per share always shows N/A in the Security Detail View if you don't have any shares. But that is not the Edit Security Details dialog where that option may be set or unset.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 7
    funkws said:
    Screenshot attached
    Less interesting....  You did not provide the Edit Security Details window.  To view the Edit Security Details window: press Ctrl + Y, right-click on the security, and select Edit
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    You cite the short term sale as a 3.78 basis as initially shown in Quicken and as reported on the broker's 1099.  How much different was the Quicken number on its Schedule D?  Is it also showing that value on a Cap Gains report for that security for 2021?  For other larger lots, what sort of differential are we talking about?

    As part of any history with this security, are there any Return of Capital transactions recorded in the Quicken data?  RtrnCap transaction affect cost basis for shares owned at the time. 

    Is there any history with this security for transfers between accounts, spinoffs, changes associated with mergers (an original different holding got merged into the company sold in 2021), or similar type events?  
  • funkws
    funkws Member ✭✭
    Sherlock - Security detail window attached. (I don't see much there. Let me know if you were looking for something other than what I captured.)

    q_lurker - I am not aware of any return of capital transactions, and there is no indication on the 1099. Similarly, nothing is flagged as a wash sale (I have seen these flagged on the 1099 in the past.) There were no spin-offs or mergers. The other lots showed significant differences. I have attached a few from 2013 (these are all covered) to show the Quicken capital gains report. The corresponding cost basis on my 1099: April: 193.12, ,July: 194.64, Aug: 196.02. I should also note that since running the "repair" commands, several of the short term lots no longer appear on Quicken's capital gains report.

    I am hoping this is the result of some error I made, so I can reliably use the information I see in Quicken after some corrections are entered.

    Thanks Sherlock, q_lurker, Rocket_J_Squirrel, Tom Young and NotACPA for your help. I am going to start copying the lot information manually in the mean time, so I have a basis for my tax return.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited March 7
    funkws said:
    Sherlock - Security detail window attached. (I don't see much there. Let me know if you were looking for something other than what I captured.)
    So there is no  "Average cost per share" as "N/A"  on the Edit Security Details window as you claimed.

    I suggest you examine the January 2021 lot for the security holding to determine when their cost basis changed.  For example, open the account register, select Holdings, set the As of: date to January 2021, left click on the  icon to the left of the security name, and reset the As of: date.  Once you have determined when the cost basis changed, it should be easier to determine what caused the cost basis to change.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    "(I have seen these flagged on the 1099 in the past.)"
    If you have had wash sale losses in OXY over the years and have not been exactly mimicking how the broker has been treating these down at the stock level, that certainly would explain at least some Quicken-broker differences in individual lot basis.  The rules for allocation of deferred losses to lots owned is just about impossible to understand and can be difficult to implement in Quicken .

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    In July, 2020 OXY did issue a set of warrants as a dividend distribution (IIRC).  I don't think that should be relevant to this cost basis issue, but wanted to be sure others hold that same view.  Further, that your records picked that up and did those warrants get exercised in some fashion that might be relevant.  

    Also, in November 2014, OXY spun off its interest in CRC with about 3.5% of the OXY basis transferring to the spun-off CRC shares with a final distribution in 2016.  That would alter your cost basis of shares acquired before those dates.  Your three cited differences are pretty consistent at a 2.7% difference.  I suggest you did not get that spinoff entered.  

    https://www.oxy.com/link/0e4c4fc3cac94a40b58437bb2faf1c54.aspx  
  • funkws
    funkws Member ✭✭
    Thank you, q_lurker. I saw a divergence after 2013 as I copied over the original cost figures and found an old placeholder entry for that spin-off. I think correcting the placeholder will fix the older entries.

    I need to check how the recent warrants were picked up in Quicken - but I think that was treated as a special dividend and came through with no impact on basis.

    I found no wash sales for this security. Previous wash sales were for another holding.

    I appreciate all the help. If this fixes everything, I can start on my schedule K-1.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    @funkws
    Among the archived posts on this site is this post.  Archived posts are not broadly available, so I took a screen snip.  While there were responses the links supplied are all dead now.  Maybe if you can make contact with that user, he can remember something relevant from June 2016.


     
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