Good records important for taxes
Dear Bruce: I have a stock that I sold, but I don’t have any record of when it was bought and for how much.
What kind of information do I need when reporting this for my taxes? Any help you can give me would be appreciated.
– Arlene, email
Dear Arlene: It seems to be the time of year for questions such as yours. I have had several similar inquiries in the last few weeks.
We all have many responsibilities, and one of those is to keep accurate records. This way you know what you paid for a particular investment, how much the profits were, and so forth. Without this information, the government can take a very narrow view.
The first thing to do is write down everything you can remember about the transaction, such as when was it made and the approximate costs. If a brokerage was used, by all means contact the broker and find out what records it has. It should have a record of the transaction, assuming it took place in this century.
In the absence of solid information, you’re going to have to go to the government and tell it you must estimate what you paid and what you sold this stock for. Don’t be too generous. The IRS will chop you up if you are.
In the event that you can reasonably live with whatever figures the IRS estimates, go in peace. If not, depending upon the amount of money involved, you may have to seek representation. I would go to a specialist who does nothing but negotiate with the IRS. Generally speaking, this is a former IRS employee. If the numbers are substantial, that is the only way to fly, but if it’s a relatively modest transaction, take your beating and get on with your life.
Dear Bruce: I am 62 years old and looking at retiring soon. I have had a reasonable income and hold about $500,000 in investments and a variety of retirement vehicles, but have no company pension to rely on.
The stock market took a deep slide in 2008, and I cannot afford to allow that to happen again. CDs and money market funds have no return. Is there a good way to position part or all of my funds to gain a long-term monthly retirement income? Annuities? How about life insurance products?
– Keith, email
Dear Keith: Unfortunately, there are no sure solutions for your problem.
You said, “The stock market took a deep slide in 2008, and I cannot afford to allow that to happen again.” You should settle on a number.
For the sake of discussion, let’s say you have an account worth $100. You tell yourself that at no time do you want it to go below 90 percent of its value, and when it hits $90, you’re going to sell it. If you spell out a plan and follow it, you will not get trapped in a huge loss.
On the other side of that, the market is doing very well, and all indicators say at the present time it should do reasonably well for the next year.
By and large, I think that investing in good, solid American companies is the way to go.
Send your questions to Smart Money, P.O. Box 2095, Elfers, FL 34680 or email bruce@brucewilliams .com.