Vanguard lists my cost-basis (cost per share) the same for all lots

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dancecore
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Vanguard lists my cost-basis (cost per share) the same for all lots

Post by dancecore » Tue Jan 23, 2018 8:14 pm

I just sold some shares in a Vanguard mutual fund this morning, using the SpecID cost-basis method. I noticed (but not until after the transaction) that the cost-basis information Vanguard shows me doesn't make sense to me. All the lots show exactly the same cost per share, even though they are spread out over a period of years. For example, on 07/29/2016, I reinvested a dividend of $115.24 to purchase 10.3450 shares at $11.14/share (according to my transaction history). However, on the cost-basis page, this is reported as a lot of 10.3450 shares with cost per share of $10.85 for a total cost of $112.21. Every single other lot is also reported as have a cost per share of $10.85 (except for the non-covered shared purchased before 2012, which show a different cost/share).

Am I misunderstanding the way that cost-basis works or is this Vanguard's mistake?

If it's their mistake, is there any urgency in getting it corrected?

donoharm
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by donoharm » Tue Jan 23, 2018 8:44 pm

This is Vanguard's error. I had it happen with 1 of 3 mutual funds I own in which all were specified as specific ID method, but 1 fund had each lot at average cost (same price). It must be a recurring glitch in their computer system. Rather than sending them an email to fix the problem, you can change the cost basis selection to another method and then change it back to specific ID. This worked for me. It will take a day or so to reset to actual specific ID cost for each lot.

blackburnian
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by blackburnian » Tue Jan 23, 2018 9:05 pm

I had the same problem. Three different lots were listed with the same cost basis, though I had bought them on different dates. I called Vanguard (twice), and eventually they fixed it. It took about 4 weeks. Vanguard also fixed incorrect realized loss/gains calculations, but that problem took 3 phone calls, 2 letters, and about 2 months to fix.

dancecore
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by dancecore » Tue Jan 23, 2018 9:14 pm

Thanks to both of you for confirming that I'm not crazy. I'll report back here when this gets resolved.

I actually don't care much about cost-basis in this particular case. The reason I used SpecID was to ensure I wasn't selling anything I had bought in the last 6 months, to avoid any extra hassle at tax time next year. But it looks like I ended up with some extra hassle anyway...

stan1
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by stan1 » Tue Jan 23, 2018 9:17 pm

elrobin wrote:
Tue Jan 23, 2018 9:05 pm
I had the same problem. Three different lots were listed with the same cost basis, though I had bought them on different dates. I called Vanguard (twice), and eventually they fixed it. It took about 4 weeks. Vanguard also fixed incorrect realized loss/gains calculations, but that problem took 3 phone calls, 2 letters, and about 2 months to fix.
Thank you for holding them accountable for accurate record keeping and meeting the IRS requirement allowing customers to elect their desired cost basis accounting method.

CppCoder
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by CppCoder » Tue Jan 23, 2018 9:18 pm

Ouch! Just to start a flame war, this never happens to me at Fidelity :P. In all seriousness, all software systems have errors. The real question is, given that this is happening to multiple users, why hasn't Vanguard fixed it? :shock: Hopefully, they will soon. This could cause some real inconvenience for people who didn't catch it until the next year filing their taxes.

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triceratop
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by triceratop » Tue Jan 23, 2018 9:25 pm

This happened to me too just before I left Vanguard. The two events were not unrelated. It took a month for them to fix the issue, and their error interfered with my tax gain harvesting season. I recommend that when convenient to look into switching to a brokerage that does not make basic bookkeeping errors with their client's investments.

Meanwhile in another thread someone will post that Vanguard has never made an error for them, so their IT problems are much-exaggerated. :)
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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vitaflo
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by vitaflo » Tue Jan 23, 2018 9:36 pm

Have you sold shares using something other than SpecID before? I had this happen to me and talked to Vanguard who said I had made a sale with Avg Cost a while back, thus when you switch to SpecID it will use the Avg Cost value for cost basis for all lots up until you made the switch. This is because there's no way for them to know which lot shares were sold before (under Avg Cost) because they were not sold via lots. Any new purchases moving forward will use the cost basis of the new purchase price however.

Monster99
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by Monster99 » Tue Jan 23, 2018 10:10 pm

I had this happen also - sold 3 lots with SpecID and the confirmation said ave cost. took one phone call to get straight, but I now have been reluctant to move my 401K to Vanguard if they can't get simple transactions straight. I wonder if they realize how much additional business they lose because of stupid errors. I am considering moving to a brokerage that listens to their clients, as this appears to be a recurring issue they refuse to fix....

FactualFran
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by FactualFran » Wed Jan 24, 2018 3:56 pm

When a change is made from Average Basis (for covered shares) the fact that the lots at the time of the change all retain the previously established average basis per share is part of the IRS regulations.

Vanguard knows which lots were sold because with Average Basis: the shares disposed of are those considered to have been acquired first. When sales are made using Average Basis, the basis includes the cost of shares that were not considered to have been sold. Simply resetting the cost of the shares not considered to have been sold when changing from Average Basis would cause the aggregate basis of the shares to be incorrect.

2015
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by 2015 » Wed Jan 24, 2018 4:08 pm

triceratop wrote:
Tue Jan 23, 2018 9:25 pm
This happened to me too just before I left Vanguard. The two events were not unrelated. It took a month for them to fix the issue, and their error interfered with my tax gain harvesting season. I recommend that when convenient to look into switching to a brokerage that does not make basic bookkeeping errors with their client's investments.

Meanwhile in another thread someone will post that Vanguard has never made an error for them, so their IT problems are much-exaggerated. :)
That probably would have been me :wink: . I'm beginning to think the reason I may not have ever encountered IT issues with VG is because I'm on the old MF platform??? VG did manage to break their perfect record with me last month with a human error during a roth recharacterization. OTOH, they fixed this within a week and all was well once again in my mutual fund platform world.

dancecore
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by dancecore » Thu Jan 25, 2018 2:32 pm

FactualFran wrote:
Wed Jan 24, 2018 3:56 pm
When a change is made from Average Basis (for covered shares) the fact that the lots at the time of the change all retain the previously established average basis per share is part of the IRS regulations.

Vanguard knows which lots were sold because with Average Basis: the shares disposed of are those considered to have been acquired first. When sales are made using Average Basis, the basis includes the cost of shares that were not considered to have been sold. Simply resetting the cost of the shares not considered to have been sold when changing from Average Basis would cause the aggregate basis of the shares to be incorrect.
Thanks for this clarification. However, I'm not sure if this applies to me. I have sold shares in this fund, but the last sale was in 2011. So I haven't sold any covered shares, or had any covered shares factor into an average cost calculation. So I don't see why they would have to adjust the cost-basis of my covered shares. Can anyone confirm this one way or the other?

FactualFran
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by FactualFran » Thu Jan 25, 2018 3:42 pm

dancecore wrote:
Thu Jan 25, 2018 2:32 pm
Thanks for this clarification. However, I'm not sure if this applies to me. I have sold shares in this fund, but the last sale was in 2011. So I haven't sold any covered shares, or had any covered shares factor into an average cost calculation. So I don't see why they would have to adjust the cost-basis of my covered shares. Can anyone confirm this one way or the other?
There are some complicating details that I have been trying to avoid getting into.

If someone has elected to use Average Basis on an account with covered shares, and later changes the basis method, then the basis of each share immediately after the change is the same as the basis immediately before the change. The shares before the change retain the average basis even if shares have not been sold since Average Basis was elected to be used.

However, if the basis method used for an account has been Average Basis because it is the default used by the broker, then the account owner may revoke the default method and the basis of each share immediately after the revocation is what it would have been if the broker default had not been in effect. The revocation must be done before a sale has been made under the default method. The revocation may have to have been done within a year of the broker default having been applied to the account.

Unless one can convince the broker than a revocation rather than a change has been done, the shares retain the average basis.

dancecore
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by dancecore » Thu Jan 25, 2018 7:19 pm

FactualFran wrote:
Thu Jan 25, 2018 3:42 pm
There are some complicating details that I have been trying to avoid getting into.

If someone has elected to use Average Basis on an account with covered shares, and later changes the basis method, then the basis of each share immediately after the change is the same as the basis immediately before the change. The shares before the change retain the average basis even if shares have not been sold since Average Basis was elected to be used.

However, if the basis method used for an account has been Average Basis because it is the default used by the broker, then the account owner may revoke the default method and the basis of each share immediately after the revocation is what it would have been if the broker default had not been in effect. The revocation must be done before a sale has been made under the default method. The revocation may have to have been done within a year of the broker default having been applied to the account.

Unless one can convince the broker than a revocation rather than a change has been done, the shares retain the average basis.
Thanks very much for the detailed explanation! I think I now understand why this applies to me.

AviN
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Re: Vanguard lists my cost-basis (cost per share) the same for all lots

Post by AviN » Mon Mar 05, 2018 6:03 pm

I had the same problem described in by the OP and followed donoharm's suggestion. It worked! Thanks donoharm. :sharebeer
donoharm wrote:
Tue Jan 23, 2018 8:44 pm
This is Vanguard's error. I had it happen with 1 of 3 mutual funds I own in which all were specified as specific ID method, but 1 fund had each lot at average cost (same price). It must be a recurring glitch in their computer system. Rather than sending them an email to fix the problem, you can change the cost basis selection to another method and then change it back to specific ID. This worked for me. It will take a day or so to reset to actual specific ID cost for each lot.

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