Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss Workout

Basis of Stock

Basis and Adjusted Basis

In order to compute gain or loss on a sale, taxpayers must provide their basis in the sold property. The basis on property is usually its cost. If Form 1099-B does not include how much taxpayers paid, then they must provide this information.

If taxpayers need help determining the basis and do not have the original purchase documents (or other records showing date of purchase and cost), refer them to their stockbroker. If taxpayers cannot provide their basis in the property, the IRS will deem it to be zero.

Special rules related to inherited property are covered in the topic, Basis Other Than Cost. Refer taxpayers to a professional tax preparer if they acquired stock by means other than a purchase or inheritance (e.g., a gift or employee stock option plan), and do not know the basis. The determination of basis in these situations is beyond the scope of VITA/TCE.