Re: Capital Gain

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Posted by Mark on July 17, 2006 at 13:52:01:

In Reply to: Re: Capital Gain posted by Gary Trimmier on July 17, 2006 at 13:23:13:

: Mark - again what you write is true, however if I accommodate IRS rules and record the cost basis from the person who gave me the stock, to provide a Capital Gain report, the stocks true value to me, as reported in performance reports is not accurate. I know I may be going in circles, but if I receive 100 shares as a gift ($0 Invested) and record it as such, then sell the shares at $10.00 I have a 100% gain of $1,000.00. Now this is its true performance and value to my portfolio. If I record the gift to satisfy the Capital Gain reports with a cost basis of its value from the person who gave me the stock, which is $10.00 per share. Then with a sell of the 100 shares, there is no gain and no increase in value to my portfolio.
: Thanks,
: Gary T.

Hi Gary,

I think you accurately understand how it works. It is up to you to decide how you want to track it. Personally, I would record the purchase at your tax cost basis, as acquired from the person who gifted it to you. This is usually the price that they paid for it, not the value on the date of the gift. (I'm not a tax expert, but I believe that is how it works.)

No matter what you record for your cost basis in the purchase transaction, the investment and portfolio value should still always be the same.

Thanks,
Mark
--
Fund Manager - Portfolio Management Software

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