Gifted Shares of Stock

hokiealum08

My parents have been gifting me shares of CL for the past two years in December. The first instance of this wasn't an issue when downloading transactions through Schwab but this most recent one is causing cost basis issues.

The problem has to do with the fact that the shares are retaining original cost basis from 2011 and the stock had a 2:1 split in 2013. This info was passed along and so Quicken thinks I have 200 shares, which is correct, but at a cost basis of $2017.50 because the original cost basis from 2011 was $4035. So now I have a transaction in the register from 2011 and don't know how to make this right.

Per Schwab, the cost basis should actually be $8070.

Any thoughts on how to tackle this?

Tom Young

Gifted shares DO retain the cost basis of the donor, though if and when you go to sell those shares you might not use that cost basis, depending on the circumstances.  https://ttlc.intuit.com/turbotax-support/en-us/help-article/investment-income/determine-cost-basis-stock-received-gift/L4bZeNvpc_US_en_US?uid=ldsa3wtf

A two for one split doubles the number shares, but halves the per share basis, resulting in a basis for all the stock remaining the same as before the split. 

The closing price of CL for all of 2011 on a post-split basis ranged from about $38 to about $47 so I'd say that Schwab probably has the correct basis here.  200 x $38 = $7,600 and 200 x $47 = $9,400 and the $8,070 certainly fits in that range. 

You can't really rely on what gets "passed along" to Quicken, you can't accept transactions blindly assuming they are correct.  You need to understand what happened in the real world and how that gets translated into accounting entries that are made in Quicken.

Here is the set of accounting entries that I would make manually to fit what you're describing here:

       Date                       Action    Security     # of Shares     Total Cost     Date Acquired

(Date stock gifted)     Add       Colgate           200            $8,070.00    (2011 date of purchase)

So I believe all you have to do is delete the original entry(s) that got the shares into your Quicken Account and replace it with the correct information along the above lines.

hokiealum08

Thanks @Tom Young that was what I needed!