Question:
I've recently sold some ESPP shares I have purchased between 1996 to 2001 from a former employer, but I lost track of their cost basis. Can I call the company to find out? My brokerage has it set as 0. Is it a good idea to notify them of the correct cost basis, once I find out what it is?
Answers:
I hope you kept your records from employment. Your taxes are (basically) based on two amounts:
1. The difference between the FMV of the stock at the date you purchased, and the amount you had to pay for the stock. This will be taxed as ordinary income.
2. The rest of the gain on the sale of the stock. This will be taxed as long-term capital gains.
So you can ask your employer, but they are not required to keep records that long. If you are really stuck, figure that you got the stock for a 15% discount (the federal maximum), pay ordinary gains on that, and capital gains on the rest. That should satisfy the IRS.
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