Accounting for Stock Options


M

Mike B

Around 1996 or thereabouts I received some stock from Texas Instruments for
whom I was working at the time. I don't recall the exact nature of the
transaction, but I remember that I didn't pay anything for the shares, they
were just given to me. I now have these shares in a Quicken account, but at
zero cost basis, which really distort the gain/loss calculation for my stock
portfolio. Any suggestions on how to reasonably account for such stock? If I
recall, TI stock in those days were near $100 a share, so today's values are
a far departure from those "good ole days" :) To complicate matters, I seem
to recall that the stock split twice or so after I received the initial
"gift".
 
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A

A Count

Around 1996 or thereabouts I received some stock from Texas Instruments
for
whom I was working at the time. I don't recall the exact nature of the
transaction, but I remember that I didn't pay anything for the shares, they
were just given to me. I now have these shares in a Quicken account, but at
zero cost basis, which really distort the gain/loss calculation for my stock
portfolio. Any suggestions on how to reasonably account for such stock? If
I

I suppose the stock value went on your tax forms as income.

So as fundamental operations the value of the stock should be as a cash
deposit and then the cash used as if to buy the stock...
 
M

Mike B

A Count said:
So as fundamental operations the value of the stock should be as a
cash deposit and then the cash used as if to buy the stock...
Say what?
 
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A

A Count

So as fundamental operations the value of the stock should be as a
Say what?
Your basis in a stock given to you is the value of the stock on the day you
received it. Your basis is not zero. And remember that you paid income tax
on the difference between zero and the value of the stock.

A deposit of shares without a basis would not be fundamentally correct.

So if your software does not allow a cost basis on deposit of shares then
you must deposit the cash value of the stock and then buy the stock with the
cash to setup the basis.
 

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