cost basis adjustment

Kal Mendelson

How do i adjust the cost basis in my windows 10 as the adjustment was made at schwab and when I update and download, it still shows the old cost basis.

thanks

QuickUserPSP

@Kal Mendelson usually in the situation you describe, the financial institution would transfer the investments to a new account with the step-up or adjusted cost basis, and then the old account would be closed. The old tax lots and cost basis are not carried over to the new account.

If Schwab did not create a new account but just simply changed the ownership of the existing account, then I think you would need to

deliver off the shares of each security using "Remove Shares" and then,

receive the shares back in using "Add Shares" with the new cost basis.

The transaction date you should use is the date Schwab made the "transfer" or cost adjustment. The new cost basis amounts are based on the fair market values of the securities on the date of death, but the actual step-up adjustment is dependent on the state you live in.

Your online account or statement with Schwab should show what transactions they did to adjust cost. That may help you with the adjustments needed on Quicken.

Tom Young

Frequently cost basis adjustments come about due to "Returns of Capital."

Sometimes the payment of cash is presented to you as a Return of Capital, in which case you use the RtrnCap action to record the cash received.

Other times the Return of Capital is first disbursed in a form of Dividend and only later, after analysis, is it discovered that some part of the Dividend actually should be accounted for as a Return of Capital. In this case you need to reclassify the previously recorded Dividend, or some part of it, as a reduction of Dividend income (cash) and an increase in Return of Capital (cash). In Quicken you do this by recording a "negative" Div action, decreasing cash, and then, using the same date you record a RtrnCap action, increasing cash, for a net change of cash of $0.

Maybe that's your situation?

If not, you need to describe your situation more clearly.

Kal Mendelson

What l need is step by step instructions on how to change the cost basis, do l have to change each stock separately?

Thanks

Tom Young

@"Kat Mendelson"

You simply are not providing enough information about your situation for anybody to comprehensively answer your questions. You are forcing people to guess at why you needed to change a security's basis and then come up with a working answer that's simply not an efficient use of your time or the time of anybody trying to help you.

I made a guess as to why you were asking the question and I posted an answer that should work for that scenario. Perhaps my guess was wrong, so I asked if my guess was correct, and if it wasn't correct I asked for a fuller explanation of your situation. I got neither.

Now with your second post where you used the plural "stocks" I could guess again that maybe you've had a merger, a spin off, a split off or perhaps a stock split, and I could then write detail instructions for each situation, but I'm not going to do that.

If multiple securities are involved here then you need to explain comprehensively what you're dealing with here including the names of the securities involved since corporate events that on their face look exactly alike need different treatments in Quicken because of the tax structure of the deal.

q_lurker

do l have to change each stock separately?

Yes, as I can’t imagine any of way. But why exactly was the cost basis adjusted by Schwab? Are the adjustments pennies or significant dollars?

Kal Mendelson

My wife had passed away and that is why Schwab did the step up, same goes for vanguard and one other fund, Morgan Stanley did the same as the others

q_lurker

My condolences on your loss.

The financial institutions are not going to update the stepped up basis. Just not in their wheelhouse. So you need to make the update changes.

Without knowing the real setups, that basically means:

• Remove Shares transactions to take out the old shares
• Add Shares transactions to add the complete number of shares with the stepped up basis and corrected acquisition date.

Kal Mendelson

All the financial institutions already updated the cost basis as of the date of death.

All l have to do is update Schwab ( if l want) in my quik

Kal Mendelson

In my quicken account.

Thanks again.

Kal Mendelson

If l have to do each on separate that could take a while.

I really don't have to do anything in quicken, it just would show more of a profit.

Thanks

Kal

QuickUserPSP

@Kal Mendelson usually in the situation you describe, the financial institution would transfer the investments to a new account with the step-up or adjusted cost basis, and then the old account would be closed. The old tax lots and cost basis are not carried over to the new account.

If Schwab did not create a new account but just simply changed the ownership of the existing account, then I think you would need to

deliver off the shares of each security using "Remove Shares" and then,

receive the shares back in using "Add Shares" with the new cost basis.

The transaction date you should use is the date Schwab made the "transfer" or cost adjustment. The new cost basis amounts are based on the fair market values of the securities on the date of death, but the actual step-up adjustment is dependent on the state you live in.

Your online account or statement with Schwab should show what transactions they did to adjust cost. That may help you with the adjustments needed on Quicken.

Tom Young

There are still details that we need to know in order provide specific step by step directions here.

The very easiest situation would be if you live in a community property state and all the securities were held in common, e.g., a joint brokerage account.

In that situation ALL the shares you and your spouse held together get a stepped up basis and ALL the shares, no matter when they were actually purchased, become "long term."

In that simplest situation you would enter a Removed action as of the DoD for each security, for all of the stock, Then on that same date you would do an Add action for the same number of shares, using the higher per-share basis, and with a "date acquired" of one year before the DoD.

Kal Mendelson

Thanks so much for your input and I appreciate it, all the financial institutions kept the same account and changed the cost basis, l think l now can change it in quicken to match what Schwab has, albeit May take some time.

Thank you again.