Recordkeeping for Stocks Not In a Brokerage Account

Gone are the days of paper stock certificates to evidence ownership of stock.  Now, if your stock is not held in a brokerage account, it will be held in a statement account with a transfer agent such as Computershare. 

If your shares are held in a brokerage account, you will have the availability to have the brokerage institution track the basis, stock splits, exchanges, non-dividend distributions, dividends, etc. for you.  However, if you have your shares in a statement account with a company such as Computershare, you may not have the same information available to you.  Therefore, you will need to track this information yourself. 

Why is it important to keep track of this information?  At some point, you may wish to sell some or all of the shares and, in doing so, you will need to report the sale on your income tax return.  You will need to report the basis – your acquisition cost.  Since you purchased the shares, the company may have had stock splits (receiving additional share(s) for each share you own), a spinoff (your shares are taken into consideration when the company gives shareholders stock in a newly acquired company), an exchange (when the company may have merged into a new company and your existing shares are exchanged for shares in the new company) or if you have a dividend reinvestment plan in place (rather than receiving dividends in the form of cash, your dividend is used to purchase additional shares).  All of these actions factor into your basis.  Without this information, you will not be able to properly report the basis of your shares sold.

For the past several years, brokerage firms have been required to track the basis of the shares owned.  But, with companies that simply hold your shares, the information is not as readily available.  You are required to keep track yourself.  How you do this is up to you.  If you like pencil and paper, a ledger sheet can be used.  If you like spreadsheets, you can set one up yourself.  Or, there are portfolio tracker apps available on the internet.  Whatever method suits your style, use it.  It will save much angst should you decide to sell the securities and need to determine the basis. 

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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