Retirement: Tax Records and The Big Beautiful Bill
Happy Thanksgiving.
Tax Records
My story starts with the desire to do a Roth Conversion in 2025. I know, I know - people have very different views on this strategy. In my case, I plan to leave some of my nest egg behind to support my adult son with a disability. 2025 will likely be my lowest income year in retirement, so if there's a Roth Conversion in my future, this would be the year.
Paying the taxes on a Roth Conversion with funds from the IRA is not preferred, but simple. My financial advisor suggested I could also pay the taxes by selling some stock that's not in my IRA. The problem for me is that neither I nor my brokerage company have solid basis number (original purchase records). I need that information to do my taxes if I sell stock this year. So down the rabbit hole I went.
When Corning offered employees the option to buy EE Savings Bonds via payroll deduction, I jumped on it. My parents would also send us a bond every so often. These bonds were all intended to help pay for my son's college education. By early 1997 I had quite a stack of bonds. The stock market was making the news, and individuals could sign up with a growing number of brokerage firms like E-Trade, Ameritrade, etc. I decided to liquidate the EE Savings Bonds and invest in the stock market. A company direct stock purchase. Some mutual funds. Some money in a brokerage account, where I could buy a few shares here and there. I also stopped buying more EE bonds and put that money into the Corning employee stock purchase plan. My mistake was not understanding the importance of record keeping during this time. It was all paper.
To make matters more complicated, change happened. One company I invested in was acquired by another. Where my shares were held moved around too. So here I am in 2025. I need some records. What do I do?
I've spent a lot of time searching for paper in the house. I found some. I found some hand-written notes too. I found some PDF files on my PC where I'd dumped all my Corning employee stock purchase plan transactions.
My financial advisor previous told me something that we don't consider - the US government doesn't have your stock purchase records either. It's really an honor system. If the dollars are high enough, I assume the IRS will ask you to produce records. For many of us, an honest estimate with some good notes may be "good enough."
For my direct stock purchase (BellSouth), I found the paper with my initial buy. They were acquired by AT&T, so my number of shares changed, and I've held all this since my original buy. I know what I paid initially, even though the stock name is different.
My Ameritrade transactions happened in early 1998 after I deposited some of the EE bond proceeds. Again, I did a simple "buy and hold" for a few stocks. For each of these stocks, I back-calculated how many shares I purchased using public stock split history. Then I chose a date in early 1998 and used the daily high price as my purchase price. The result is going to be very close to my real basis for those stocks.
The Corning employee stock purchase plan produced a lot of stock buy transactions, along with dividends. There are a couple of ways to approach the basis calculation. I have the basis numbers for each block of stock buys. I could also calculate an average basis for all the blocks, and use that number. Either way, I have decent records here, even though I don't have the original paper.
My advice to all of you:
- Resolve any current record keeping problems sooner rather than later. I'm scrambling to do something the last month of the year. This is not a retirement activity I enjoy.
- Download your statements once a year, and make sure you have a backup. A USB drive at a safe deposit box for example.
The Big Beautiful Bill
Brian L. sent me a text back in October and the Bill Beautiful Bill. I've been carrying that to-do item around since then. I think I was hesitant to pursue it because it was politicized heavily, and I learned early on with these emails to stay away from some subjects. I did eventually read the article Brian sent, and it's pretty good. The link to it follows:
Sorry Brian for sitting on this so long.
I found some articles on the Big Beautiful Bill that were pretty thorough. I share them via these links: