Questions to Start

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Reilyx
Posts: 10
Joined: Fri May 12, 2017 2:36 pm

Questions to Start

Postby Reilyx » Sat May 13, 2017 10:13 am

Background: I am a medical resident with another two years until I am finished with my training. My current saving ability is low, but I have tried to get into the practice of putting something away with regularity. Obviously, I am at the beginning of the race, but I want to start strong so I can end strong.

Emergency Fund: 3 months of expenses
Debt: med school loans ~$150,000 (6.8%) not in repayment, will refinance when I am
Tax filing: married filing jointly, no dependents
Tax Bracket: 25% federal, 5.75% state
Residence: Virginia
Age: 29
Desired asset allocation: 70/30
International: 33%

Her taxable account at Scwhab: $30,000
75% Exxon Stock (XOM)

Her Roth IRA at Schwab: $5,000
12.5% Schwab S&P 500 Index Fund (SWPPX) 0.03%

His Roth IRA at Schwab: $5,000
12.5% Schwab Fundamental US Large Company Index Fund (SFLNX) 0.25%

New annual contributions:
$1000 to His IRA from income
$400 to Her IRA from income
$600 from XOM dividends to Her IRA

Further explanation:
I set up the Roth IRAs while I was still in medical school because I just felt like I needed something but I did not know what I was doing. I have since tried to educate myself and improve my portfolio. Money in the Roth accounts is thus what I have been able to save while a student and resident.

The taxable account is from my father-in-law that has been in my wife's name since she was born. This is what he decided to do for his children as a financial boost to their adult lives. His philosophy is put all your money in a few blue chip stocks and let em ride. I obviously have some reservations with this approach. Nevertheless, what's done is done and that money is there now.

Right now I am a resident physician. In two years my income will dramatically increase as I leave training and join the "real" workforce. The main implication of this to my questions is that my tax bracket will change and thus the taxes I pay on capital gains.

Questions:
1. Right now we have our accounts at Schwab because that's the broker I happened to pick while I was in medical school. From what I gather, Schwab is attempting to compete with Vanguard on the low expense front and thus have some good funds/ETFs. The rub is that they don't adequately cover the entire global market with those and I would need to pay brokers fees to diversify outside of Schwab assets into those specific Vanguard ETFs as my savings grew. I could keep the fees to a minimum by only making large trades in the future but the fees still exist.

I don't currently have a 401(k) or equivalent and I can't have any certainty that a future employer will even offer one (depends what type of job I end up pursuing, academic vs private practice group vs starting own practice). I could theoretically end up with an individual 401(k) with Vanguard in which I could diversify sans fees but this isn't a guarantee.

So my first question is: should I transfer our IRAs to Vanguard to increase our options for low expense funds or stick with the Schwab funds and not pay the transfer fee (from Schwab to Vanguard) with the hope that I either am able to obtain another tax sheltered account with Vanguard or simply pay the transaction fees for the few ETFs in order to adequately diversify?

2. I already stated above that I am not thrilled about having such a large amount of our portfolio in a single asset in a taxable account. Granted it pays a decent dividend which up until this upcoming year (assuming the current administration doesn't change it) we have not had to pay capital gains on. The tax on those dividend gains and the gains from selling the stock outright to better diversify will only increase in 2 years when my income increases (again assuming no drastic changes to the tax code). Second question is therefore: should I sell the Exxon stock and buy diversified, tax efficient index ETFs?

Thank you in advance for your time and expertise!

Chip
Posts: 1305
Joined: Wed Feb 21, 2007 4:57 am

Re: Questions to Start

Postby Chip » Sat May 13, 2017 1:12 pm

Hi, and welcome!

I don't think you have to move from Schwab unless you want to. You can adequately diversify there with their low cost funds. If you need something they don't have in their house funds, just buy some of an ETF (from Vanguard or elsewhere) every once in a while and don't worry about the commissions. For example, I have accounts at Fidelity. I buy both Schwab and Vanguard ETFs there. Commissions are $5. They don't matter to me at all.

I think many here will tell you to sell the XOM. It pays a high dividend, so you're going to face those taxes forever. And you're undiversified. But how much will you have to pay in cap gains taxes to sell it? Frankly, I wouldn't worry about selling it. In a few years your other assets are going to dwarf that position. Plus you may end up tax loss harvesting down the road, allowing you to sell the XOM position without incurring taxes.

Do you have significant expenses right now that aren't allowing you to save more? If you're in the 25% bracket your gross income has to be north of $95k. 2k per year in savings from that doesn't seem like much.

I'd be remiss if I didn't mention a web site run by one of our members, specifically targeted at docs. It's The White Coat Investor and is well worth a visit.

Reilyx
Posts: 10
Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sat May 13, 2017 1:27 pm

Thanks for the reply,

That's honestly where I was leaning regarding the Schwab accounts, just wanted some other opinions.

That is a good point regarding the potential to save via losses in the future and just stick it out for now.

I got the 25% from 2016 jointly filed which I thought was 75,301. We did not make that last year but will barely go over that for FY 2017 assuming it doesn't change (which it might). That being said we could definitely save more. One of the issues we ran into is wanting to be in a house for residency and unfortunately going over budget. Luckily our rent is a locked in amount so I guess in 2014 dollar spending power (year we moved in) it is going down each year. Additionally, since my wife was going to end up having to spend a sizable chunk of time alone there (with me working long hours on call) I figured we could make her life a little better and it would be a worthwhile investment for our marriage.

I have spent a fair amount of time on white coat investor and tore through the book in <24 hrs. Definitely an incredible resource.

Thank you again for your response.

Chip
Posts: 1305
Joined: Wed Feb 21, 2007 4:57 am

Re: Questions to Start

Postby Chip » Sat May 13, 2017 1:43 pm

You are absolutely correct that the 2016 25% bracket started at 75,301 of taxable income. I was talking about gross income, which is before you subtract your standard deduction of 12,600 and personal exemptions of 8,100.

I understand completely about needing a decent place of refuge for both spouses when one is working crazy hours. Just try to continue the current lifestyle as much as possible when the larger income kicks in.

I think that a few years down the road the area where you will find Schwab lacking is in their municipal bond fund offerings. Vanguard is the undisputed king there. But that doesn't mean you have to do anything now; there will be little to no cost to do it later. I suspect you'll be paying down the loans for a while before needing muni bonds anyway.

Reilyx
Posts: 10
Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sat May 13, 2017 1:48 pm

Ahh, very good. Still relatively new to an adults understanding of taxes...thanks for the clarification. Definitely nowhere near that bracket then.

Does that change your opinion or does my lack of understanding run deeper? If I don't have to pay taxes on the gains while still in the lower bracket is it now worth it to gain the diversity to sell now?

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BL
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Re: Questions to Start

Postby BL » Sat May 13, 2017 1:56 pm

Would your wife be willing to sell enough to fund $5500/each for Roths for both or at least for her? The Roth is a use or lose opportunity each year.

Capital Gains are at 0% if gains don't bring taxable income above the 15% tax bracket. I would definitely sell up to top of bracket (or even above).

Chip
Posts: 1305
Joined: Wed Feb 21, 2007 4:57 am

Re: Questions to Start

Postby Chip » Sat May 13, 2017 2:09 pm

Reilyx wrote:Ahh, very good. Still relatively new to an adults understanding of taxes...thanks for the clarification. Definitely nowhere near that bracket then.

Does that change your opinion or does my lack of understanding run deeper? If I don't have to pay taxes on the gains while still in the lower bracket is it now worth it to gain the diversity to sell now?


Yes. I agree with BL's suggestions if you are in the 15% bracket. Sell what you can at 0% gain each year and fund Roth IRAs for both of you.

Do you know the cost basis of the XOM stock?

Tyler Aspect
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Joined: Mon Mar 20, 2017 10:27 pm
Location: California
Contact:

Re: Questions to Start

Postby Tyler Aspect » Sat May 13, 2017 2:10 pm

Reilyx wrote:Background: I am a medical resident with another two years until I am finished with my training. My current saving ability is low, but I have tried to get into the practice of putting something away with regularity. Obviously, I am at the beginning of the race, but I want to start strong so I can end strong.

Emergency Fund: 3 months of expenses
Debt: med school loans ~$150,000 (6.8%) not in repayment, will refinance when I am
Tax filing: married filing jointly, no dependents
Tax Bracket: 25% federal, 5.75% state
Residence: Virginia
Age: 29
Desired asset allocation: 70/30
International: 33%

Her taxable account at Scwhab: $30,000
75% Exxon Stock (XOM)

Her Roth IRA at Schwab: $5,000
12.5% Schwab S&P 500 Index Fund (SWPPX) 0.03%

His Roth IRA at Schwab: $5,000
12.5% Schwab Fundamental US Large Company Index Fund (SFLNX) 0.25%
Your portfolio total value is $40,000. Your target asset allocation was 70% stock / 30% bond. That works out to be $28k in stock funds, and $12k in bond funds. You can put your bond portion in your Roth IRA accounts.
New annual contributions:
$1000 to His IRA from income
$400 to Her IRA from income
$600 from XOM dividends to Her IRA

Further explanation:
I set up the Roth IRAs while I was still in medical school because I just felt like I needed something but I did not know what I was doing. I have since tried to educate myself and improve my portfolio. Money in the Roth accounts is thus what I have been able to save while a student and resident.

The taxable account is from my father-in-law that has been in my wife's name since she was born. This is what he decided to do for his children as a financial boost to their adult lives. His philosophy is put all your money in a few blue chip stocks and let em ride. I obviously have some reservations with this approach. Nevertheless, what's done is done and that money is there now.

Right now I am a resident physician. In two years my income will dramatically increase as I leave training and join the "real" workforce. The main implication of this to my questions is that my tax bracket will change and thus the taxes I pay on capital gains.

Questions:
1. Right now we have our accounts at Schwab because that's the broker I happened to pick while I was in medical school. From what I gather, Schwab is attempting to compete with Vanguard on the low expense front and thus have some good funds/ETFs. The rub is that they don't adequately cover the entire global market with those and I would need to pay brokers fees to diversify outside of Schwab assets into those specific Vanguard ETFs as my savings grew. I could keep the fees to a minimum by only making large trades in the future but the fees still exist.

I don't currently have a 401(k) or equivalent and I can't have any certainty that a future employer will even offer one (depends what type of job I end up pursuing, academic vs private practice group vs starting own practice). I could theoretically end up with an individual 401(k) with Vanguard in which I could diversify sans fees but this isn't a guarantee.

So my first question is: should I transfer our IRAs to Vanguard to increase our options for low expense funds or stick with the Schwab funds and not pay the transfer fee (from Schwab to Vanguard) with the hope that I either am able to obtain another tax sheltered account with Vanguard or simply pay the transaction fees for the few ETFs in order to adequately diversify?
Vanguard fund selections are generally less costly compared to Schwab. Granted there are a number of Schwab Index funds that are competitive. I noticed you have one Schwab index fund with expense ratio of 0.25%. You should be able to get a similar Vanguard fund with less cost at Vanguard.

2. I already stated above that I am not thrilled about having such a large amount of our portfolio in a single asset in a taxable account. Granted it pays a decent dividend which up until this upcoming year (assuming the current administration doesn't change it) we have not had to pay capital gains on. The tax on those dividend gains and the gains from selling the stock outright to better diversify will only increase in 2 years when my income increases (again assuming no drastic changes to the tax code). Second question is therefore: should I sell the Exxon stock and buy diversified, tax efficient index ETFs?
I think you should sell the individual stock. It is just too not diversified to remain there.
Thank you in advance for your time and expertise!
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Reilyx
Posts: 10
Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sat May 13, 2017 2:11 pm

That is something I had not fully thought of, to just sell up to the IRA contribution for both over the next two years. I think I was mostly stuck on just making the taxable account diversified and more efficient.

That is very good food for thought, thank you!

Reilyx
Posts: 10
Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sat May 13, 2017 2:26 pm

Chip wrote:Yes. I agree with BL's suggestions if you are in the 15% bracket. Sell what you can at 0% gain each year and fund Roth IRAs for both of you.

Do you know the cost basis of the XOM stock?


I have it for about the first 15% of the shares purchased (+$360). The information isn't listed from then on at least where I am looking. It just says "missing."

Edit: Just found it, gonna take a while to calculate it all

Edit2: If I did it right, it is a loss. Cost basis of 32,638 with market value 31,172
Last edited by Reilyx on Sat May 13, 2017 2:58 pm, edited 2 times in total.

Reilyx
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Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sat May 13, 2017 2:31 pm

Tyler Aspect wrote:Your portfolio total value is $40,000. Your target asset allocation was 70% stock / 30% bond. That works out to be $28k in stock funds, and $12k in bond funds. You can put your bond portion in your Roth IRA accounts.

Vanguard fund selections are generally less costly compared to Schwab. Granted there are a number of Schwab Index funds that are competitive. I noticed you have one Schwab index fund with expense ratio of 0.25%. You should be able to get a similar Vanguard fund with less cost at Vanguard.

I think you should sell the individual stock. It is just too not diversified to remain there.


Yeah, I figured I'd start with large cap stock indexes. I definitely need to add some bonds in the next round.

That's my rub for wanting to leave as well. I know there are other Schwab funds with lower expense ratios too which I could move it into.

It's where I'm leaning, thanks for your input!

Chip
Posts: 1305
Joined: Wed Feb 21, 2007 4:57 am

Re: Questions to Start

Postby Chip » Sun May 14, 2017 3:54 am

Reilyx wrote:If I did it right, it is a loss. Cost basis of 32,638 with market value 31,172


If you're SURE about that, then you can sell immediately with no tax cost. And should sell. But calculating basis on shares that have been owned a long time can be tricky if there were stock splits and/or dividends reinvested.

So, some additional questions:

How long has your wife owned the original XOM shares (the first lot purchased)? Were the shares purchased in HER account (vs. being purchased by her father in his account and then given to her as a gift)? Did she reinvest dividends into additional shares?

Sorry for all the questions. I prepare taxes as a volunteer. One of the more complex things we run into is trying to calculate an accurate cost basis for stock that has been held a very long time with dividends reinvested.

Reilyx
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Joined: Fri May 12, 2017 2:36 pm

Re: Questions to Start

Postby Reilyx » Sun May 14, 2017 6:48 am

Chip wrote:If you're SURE about that, then you can sell immediately with no tax cost. And should sell. But calculating basis on shares that have been owned a long time can be tricky if there were stock splits and/or dividends reinvested.

So, some additional questions:

How long has your wife owned the original XOM shares (the first lot purchased)? Were the shares purchased in HER account (vs. being purchased by her father in his account and then given to her as a gift)? Did she reinvest dividends into additional shares?

Sorry for all the questions. I prepare taxes as a volunteer. One of the more complex things we run into is trying to calculate an accurate cost basis for stock that has been held a very long time with dividends reinvested.


All bought under her name in the account starting in 2006. Dividends were reinvested until 2013 at which point we switched to Schwab and they sat in a money market until I noticed it and moved that money to her IRA. No additional shares have been bought since April '13.

I came up with that number by pulling up the shares history in the account and plugging them into the Schwab cost basis calculator. My reservation is that on the day we moved accounts, it shows a bunch of very small share purchases 0.03-0.04-0.1 so on an so forth until its 1-2 shares per transaction then a final large 55 share purchase.

These all say the cost basis information is missing but when I put the sum of all the shares from that day into the calculator it spit out a number. That's why I'm not totally sure. I can definitely say no additional shares have been bought since that day though.

Chip
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Re: Questions to Start

Postby Chip » Sun May 14, 2017 7:23 am

Reilyx wrote:All bought under her name in the account starting in 2006. Dividends were reinvested until 2013 at which point we switched to Schwab and they sat in a money market until I noticed it and moved that money to her IRA. No additional shares have been bought since April '13.

I came up with that number by pulling up the shares history in the account and plugging them into the Schwab cost basis calculator. My reservation is that on the day we moved accounts, it shows a bunch of very small share purchases 0.03-0.04-0.1 so on an so forth until its 1-2 shares per transaction then a final large 55 share purchase.


I don't have access to the Schwab calculator, but it might not be accurate if you moved the account to Schwab after reinvesting for a few years. The good news is that if you have good records you can pretty easily reconstruct the total cost basis.

You'll need:
Original purchase price (including commission)
The total amount of dividends that were reinvested. But not the dividends that she took in cash and didn't reinvest.
Cost of any additional purchases.

Total cost basis is the sum of all of these. I'm assuming there have never been any sales. If there have been, that's important.

You can probably get most of these from her tax returns/1099-DIVs if she still has them. If not, you can probably do a decent job of reconstruction from public records. You only have to reconstruct through 2010. For purchases from 2011 on brokers were required to track cost basis. So you should have good info on reinvestments occuring in 2011-2013.

Another possibility is if she has records from the broker prior to Schwab. Cost basis of shares acquired there through dividend reinvestment may be tracked.

Just let us know the info you have and I suspect we can get pretty close.

Reilyx
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Re: Questions to Start

Postby Reilyx » Sun May 14, 2017 9:28 am

Chip wrote:I don't have access to the Schwab calculator, but it might not be accurate if you moved the account to Schwab after reinvesting for a few years. The good news is that if you have good records you can pretty easily reconstruct the total cost basis.

You'll need:
Original purchase price (including commission)
The total amount of dividends that were reinvested. But not the dividends that she took in cash and didn't reinvest.
Cost of any additional purchases.

Total cost basis is the sum of all of these. I'm assuming there have never been any sales. If there have been, that's important.

You can probably get most of these from her tax returns/1099-DIVs if she still has them. If not, you can probably do a decent job of reconstruction from public records. You only have to reconstruct through 2010. For purchases from 2011 on brokers were required to track cost basis. So you should have good info on reinvestments occuring in 2011-2013.

Another possibility is if she has records from the broker prior to Schwab. Cost basis of shares acquired there through dividend reinvestment may be tracked.

Just let us know the info you have and I suspect we can get pretty close.


It looks like the problem is that Schwab only has the cost basis and even the purchase date from '06-'12. The unknown shares are just listed as April '13 which is the date we transferred accounts. I would guess that I need to track down the original purchase dates from the original broker in order to actually know our cost basis. Assuming this is possible?

Edit: Also looks like there will be a rather substantial gain because he was buying them for her since the early 90s and the vast majority are from that time period probably swinging it to a net gain of >$20k. Selling all of it would probably keep us out of taxable capital gains territory but is just a rough estimate on the value obviously.

I think it would definitely stay out of range if I just sold enough to fund the IRAs the next 2 years.

A probably naive question, if I sell these, will Schwab now have the capital gains information from the sale making it available to me for tax purposes or is the onus still on me to find that information come tax time and report accordingly?

Thank you for your patience by the way! You're probably screaming at the computer each time I give a poorly informed answer.

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BL
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Re: Questions to Start

Postby BL » Sun May 14, 2017 11:39 am

The brokerage is required to give CG info to IRS and you on any purchases (including reinvestments) since January 1, 2011. So I would start with that simpler group of purchases and see what you have.

1. Don't sell within one year if there is a gain - short term gains are taxed at your regular rate.

2. Look at each purchase (incl reinvestments) from your last move. Sell any with losses and those with gains up to losses. Especially sell smaller reinvested amounts to clean it up a bit.

3. Look at all purchases since 1/1/2011. They should have records for these as required by IRS. Keep selling any with losses and gains up to losses, including #2. Sell to bring gains up to near the top of your tax bracket, at least. Consider whether to have some 15% taxable CGs or not.

4. Look at any older ones that you have records for. Sell losses and gains up to losses.

5.Plan to get more info on unknowns, and make a plan for them, next year, perhaps.

Edit: By the way, the default cost basis for tax purposes is zero. That would mean the current value is all CG. So it would be good to do some research for an estimate of cost. Google, contact her father and brokerages as well as the company to get what you can. There is a surprising amount of information online these days.
Last edited by BL on Mon May 15, 2017 7:10 am, edited 1 time in total.

Chip
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Re: Questions to Start

Postby Chip » Mon May 15, 2017 5:46 am

Reilyx wrote:It looks like the problem is that Schwab only has the cost basis and even the purchase date from '06-'12. The unknown shares are just listed as April '13 which is the date we transferred accounts. I would guess that I need to track down the original purchase dates from the original broker in order to actually know our cost basis. Assuming this is possible?

Edit: Also looks like there will be a rather substantial gain because he was buying them for her since the early 90s and the vast majority are from that time period probably swinging it to a net gain of >$20k. Selling all of it would probably keep us out of taxable capital gains territory but is just a rough estimate on the value obviously.

I think it would definitely stay out of range if I just sold enough to fund the IRAs the next 2 years.

A probably naive question, if I sell these, will Schwab now have the capital gains information from the sale making it available to me for tax purposes or is the onus still on me to find that information come tax time and report accordingly?


As BL said, Schwab is required to have the cost basis info on all purchases/reinvestments since Jan '11. So mentally put those shares into one group.

Schwab has no responsibility (nor does the previous broker) to track cost basis on the remaining shares (purchased/reinvested before Jan '11). The previous broker MAY have done it as a courtesy to their clients, but it appears that information, if it existed, was lost when the account was transferred. I suspect that's the origin of the lot labeled April '13.

The first thing to do is to look for statements from the previous broker and see if they have any cost basis information for those remaining shares. Absent that, call the previous broker and ask if they have cost basis info or can produce a copy of her 3/13 statement. Might work, might not. What information is it that you have that tells you her father was buying in the early 90s? That info alone might be helpful.

To answer your question, if you sell some shares at Schwab without giving them specific instructions they will send you a 1099-B that tells you the sale date and sale proceeds, unknown cost basis and unknown purchase date, assuming you sell fewer shares than are listed in that April '13 group. It will be up to you to provide the information when you fill out your tax return. That will continue until all of the April '13 lot is sold and you start selling the post-2010 shares. Schwab will provide date of purchase and cost basis for those shares only.

If you are able to figure out cost basis, Schwab probably has a way for you to enter that information into her account on their web site. I know that Fidelity does. In a batch of 1000 shares I could tell Fidelity I bought these 500 on this date at this total cost, this 50 on another date, another cost, etc. When it came time to sell I could pick and choose which tax lots to sell. This process of identifying specific tax lots is called Specific Share Identification, or SpecID. It's an IRS term. Read about it and other cost basis methods in the wiki here and here if desired. Ignore anything on average cost basis as that method isn't allowed for individual stocks.

Note that you will have to pay Virginia tax on the capital gains. VA starts their tax return with Federal AGI, so profits from the XOM sale will be included in your VA income.

Reilyx
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Re: Questions to Start

Postby Reilyx » Mon May 15, 2017 10:37 am

BL wrote:By the way, the default cost basis for tax purposes is zero. That would mean the current value is all CG. So it would be good to do some research for an estimate of cost. Google, contact her father and brokerages as well as the company to get what you can. There is a surprising amount of information online these days.


Chip wrote:As BL said, Schwab is required to have the cost basis info on all purchases/reinvestments since Jan '11. So mentally put those shares into one group.

Schwab has no responsibility (nor does the previous broker) to track cost basis on the remaining shares (purchased/reinvested before Jan '11). The previous broker MAY have done it as a courtesy to their clients, but it appears that information, if it existed, was lost when the account was transferred. I suspect that's the origin of the lot labeled April '13.

The first thing to do is to look for statements from the previous broker and see if they have any cost basis information for those remaining shares. Absent that, call the previous broker and ask if they have cost basis info or can produce a copy of her 3/13 statement. Might work, might not. What information is it that you have that tells you her father was buying in the early 90s? That info alone might be helpful.

To answer your question, if you sell some shares at Schwab without giving them specific instructions they will send you a 1099-B that tells you the sale date and sale proceeds, unknown cost basis and unknown purchase date, assuming you sell fewer shares than are listed in that April '13 group. It will be up to you to provide the information when you fill out your tax return. That will continue until all of the April '13 lot is sold and you start selling the post-2010 shares. Schwab will provide date of purchase and cost basis for those shares only.

If you are able to figure out cost basis, Schwab probably has a way for you to enter that information into her account on their web site. I know that Fidelity does. In a batch of 1000 shares I could tell Fidelity I bought these 500 on this date at this total cost, this 50 on another date, another cost, etc. When it came time to sell I could pick and choose which tax lots to sell. This process of identifying specific tax lots is called Specific Share Identification, or SpecID. It's an IRS term. Read about it and other cost basis methods in the wiki here and here if desired. Ignore anything on average cost basis as that method isn't allowed for individual stocks.

Note that you will have to pay Virginia tax on the capital gains. VA starts their tax return with Federal AGI, so profits from the XOM sale will be included in your VA income.


We're getting as much info from my father in law as possible. We personally don't have any useful information from the old broker. You are able to update information in Schwab so we'll have to see if my father in law knows when he bought the shares. I think I would still be able to sell up to the next tax margin without going over and fully fund both IRAs. It would just be a hassle later with the final 1/3 left over once I bump up. Paying the Virginia tax was something I noticed recently which is another reason to actually know the cost basis so that that tax cost is minimized.

I came up with the 90s number just based on the pattern of purchases and the number of unknown purchases from when the dates start. He made quarterly purchases and assuming he kept that pattern I extrapolated back to the early 90s. He will corroborate that here soon. A wrench in that estimate is that the stock split twice between then and now.

Overall, even if I end up having to pay higher gains taxes, I do think the diversity gained will be better in the long run.

Edit: Got a list of dates and purchase amounts. Now I get to look up each date and how much that amount would buy and cross reference to the unknown stock amounts in the account. Going to be fun.

Reilyx
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Re: Questions to Start

Postby Reilyx » Fri May 19, 2017 3:11 pm

Anyone who was curious the end of the saga:

Was able to piece together cost basis from expense reports from my father in law. Will be able to sell up to my IRA contribution max this year and next and stay beneath federal capital gains taxes. I'll likely sell the last bit and place into a more diverse tax efficient asset the year after that.

Thank you for all of your helpful insight!

Chip
Posts: 1305
Joined: Wed Feb 21, 2007 4:57 am

Re: Questions to Start

Postby Chip » Sat May 20, 2017 6:27 am

Reilyx wrote:Anyone who was curious the end of the saga:


Thanks for checking back in. Good luck, and don't be a stranger around here.


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