Cost Basis of Stocks Can Vex Taxpayers

A "sure thing" is a rarity, of course, when it comes to federal legislation, especially in an election year. Although President Bush supports increased basis reporting and a similar version was approved by the House last December, the Senate's housing assistance measure does not contain basis language.

But Stevie Conlon, tax director for GainsKeeper, believes the measure is closer than ever to becoming law. "If the [legislative] alignment is right, it could become law quickly," says Conlon, whose Capitol Hill sources have been willing to offer "a much stronger view about a provision's chances than most people are usually willing to give on tax bills."

Options Until Then

While such added transaction data could help investors more accurately figure their tax liability on future sales, what is a filer today, facing the April 15 deadline and uncertainty about a security's basis, to do?

In addition to utilizing specialty software or subscription services, taxpayers can check local law or technical libraries for stock historical data.

You also can request an extension to file. Of course, you'll still have to pay any taxes you estimate you owe.

Washburn recommends that investors still working through transaction-basis issues go ahead and file using the data they have.

"If they think they can get more accurate information later but don't have accurate information at the moment, make the most reasonable estimate now and file the return," he says. "Then when they get the more accurate information, they can come back and file an amended return."