Question

Can I adjust cost basis of remaining stock to correct for a cost reporting error on a prior sale?

Forum|Forum|5 years ago
June 10, 2020
2 replies
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I bought 400 shares of stock. When I sold 300 of the shares in 2004, I accidentally understated the cost and overstated the gain by $150 and paid too much tax. It is too late to file an amended return, but can I increase the cost basis of the remaining 100 shares by $150 to compensate for the error? I am using the FIFO cost basis method.

fanfare

Employee

No.

W

WildTurkey

As you say it is too late to file an amendment. It looks impossible to claim a refund because of your prior error in cost basis. Per the IRS:

File within three-year time limit. Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax – usually April 15 – whichever is later.

You can make a case for a basis change if you have two items of fact: (1) proof of purchase date(s) for the remaining 100 shares and (2) stock price(s) for the stock purchase date(s). These you might get from

a lookup on Yahoo Finance, Morningstar, etc. If you can't find stock prices on Yahoo, Morningstar. etc, try writing the company you own to get historical prices form them.