This is a post from the 2011 archives... I never actually finished it...

Once upon a time, my stocks were single stocks instead of index funds.  I am only now recovering from those dark dark times.  (Very long story involving family etc.)

Used to be I just held on to the stock because I was so terrified of having to deal with the outcome come tax time.  However, with the recession and time passing and stuff... well, some of the companies have gone out of business or been bought off or spun-off etc... and like it or not, I'm having to deal with the tax implications.  Even worse, some of these companies get more and more complicated the longer I put off selling.  I currently have 1 AOL stock.  I used to have a lot of AOL stock... but then Time Warner and a bunch of other stuff happened.

Here's information from a 2008 USA Today article on how to calculate cost basis.

Update in 2022:  I currently have zero AOL stock.  Eventually everything got bought out/spun-off or sold.  I think in 2011 I may have actually just gotten rid of the single stock, but it may be that there was another spinoff and there just wasn't enough left for a full share.

We spent a LOT of time with old Brown and Co (which itself got purchased by Etrade and didn't keep its records) printouts trying to figure out what the cost of various points in time when my father bought the stock on my behalf.  (Which we could do only because I never throw things out.) Then trying to figure out when various things got bought/spun-off/sold and putting things through various formula.  We probably could have just made stuff up since there really seems to be no record of anything ever happening other than our best guess from these print-outs.  But unfortunately for us we're too honest for that and did our best to figure out what the actual numbers were.

I don't think our tax burden was that bad because, well, AOL and Time Warner weren't actually doing all that well in 2011 compared to whenever it was those stocks were bought.  Previously we'd actually been able to take losses when a pharmaceutical stock went to zero.  Single stocks are not a great investment if you're buy and hold, and boy can they be a huge hassle.

Of course, now when you buy individual stocks, the company is supposed to keep track of when you bought them so they can figure out your cost basis when you sell.  That is likely a good thing as most people with stocks are likely not as honest as DH and I are and are perfectly happy to cheat the US government of tax $$.

My current hope is that any other things we have left will stick around until I die and then my heirs won't have to worry about cost-basis because everything will be stepped up.  But we'll see.

I definitely only invest in broad-based indices and ETFs myself.

Have you ever had to deal with figuring out cost-basis?  Do you invest in individual stocks?