Resetting Cost Basis of Outstanding Shares by Tax Lot in Premier

gwwilliams3
gwwilliams3 Member ✭✭
in Investing (Windows)
Is there any way "reset" or input new cost basis info by tax lot for outstanding security share only (in Quicken Premier)? My current cost basis info is not really valid, as I have not tracked the history religiously enough (in Quicken), and going back to "day one" to try and re-create the whole history for each security is not really practical or possible. At this point the tax lot history of the shares that I still own is all that is relevant (and I do know what that is, although it is not what Quicken currently says it is, for the reason stated above). If I could just input what the cost basis of each security is today (by tax lot) without having to reconstruct everything that came before then I could start tracking cost basis in Quicken again, but otherwise I will have have to give up on that, and just let my brokers do all of the cost basis accounting for me. Any thoughts/suggestions?

Answers

  • Sherlock
    Sherlock Member ✭✭✭✭
    To reset cost basis, I suggest you consider using Removed and Added transactions.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    Cost basis is calculated on the costs associated with the purchase, activities and maintenance of the securities you currently own.  Securities you owned previously but no longer have don't factor into it.
    The only way I know of to accurately recalculate cost basis is to review the costs for each currently owned lot individually and then correct any share quantities, share prices and transaction commissions/fees errors you might find.  You can make these changes/corrections by clicking on the transaction to highlight it and then clicking on "Edit" on the right side of that transaction line.
    But it gets more complicated than that because there are other costs that also need to be taken into account, such as, stock splits, reinvested dividends, reinvested capital gains distributions, return of capital distributions, foreign taxes paid and other management fees charged.  Many of these tax-related events are captured in tax forms other than your 1099-B form and Schedule D capital gains but some will be captured only there.
    Because of all this, I've found that the cost basis seen in Quicken is not accurate enough to be used for tax reporting purposes.  It's good enough to get a good ballpark feel for how your investments are performing and how it might impact your tax return but for tax reporting purposes you should be relying on the information reported on the tax documents sent to you by your brokers.  After all, that is what the IRS will rely on and the last thing your want to do is raise flags with the IRS because what you reported does not exactly match what the brokers provided them.
    That all being said, if you have some securities that you've held for many years, the cost basis might not be reported in the 1099-B you receive from your broker.  In that case, it is better to get your broker to calculate the cost basis for the affected shares, determine if they are short-term or long-terms gains/losses and send that to you in writing (or at least an email).

    (Quicken Classic Premier Subscription: R55.15 on Windows 11)

  • gwwilliams3
    gwwilliams3 Member ✭✭
    Thanks -- I think you are right that it is best just think of the cost basis data and gain/loss info in Quicken as very approximate (i.e. for general planning purposes), but just let the brokerages maintain all of the actual tax lot history and records (since you enter the sell orders there, by tax lot, anyway). So I have changed over to Average Cost accounting for most of my securities in Quicken (to simplify things in Quicken).
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    Good.  I came to that same conclusion several years ago when I'd imported my Quicken data into my tax software and I thought all was well.  It's a good thing that I always double and triple check the entries made into my tax software before filing because I've found that, while most of the entries were fine, there were some discrepancies when comparing to the tax forms I'd received from my investment financial institutions. Most were not big differences but they were enough that I'd risk raising flags with the IRS if I did not correct them.  I've only had one tax return audited by the IRS the last 50 yrs and I don't ever want to go through that, again, because of the amount of time it took in research, documents gathering, writing letters to the IRS and filing an amended return.  Fortunately the IRS accepted everything I'd sent them and I did not have any fine or interest to pay but in the end I just came to the conclusion that trying to save a little bit of time in filling out my tax returns by blindly relying on Quicken to fill in data on my return is simply not worth the increased risk of getting audited.  I do use Quicken's tax reports extensively (especially the non-investments income, IRA withdrawals and deductions data) in my tax returns preparations because they are great tools and very helpful but even with those I sometimes find issues that need to be corrected.  I always have to keep in mind, "Trust but validate."

    (Quicken Classic Premier Subscription: R55.15 on Windows 11)

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