Every now and then, people in the know share insights through this column. This week, Lauren Zajac, who is the chief legal officer at Workhuman (which provides human capital management software) and is an advocate for the empowerment of women, offered thoughts on how women make -- or don’t make -- financial decisions.

One of the topics we discussed was professional women who have very successful careers but often abdicate to their husbands on financial affairs. Why would they do that?

Zajac said she did this in her own life, adding that “I think there’s some level of indoctrination around who typically makes those decisions in the family. At least for me, there was some kind of mental block: He knows how to do that so I won’t get involved.”

Zajac related the story of buying a car. When the dealer pointed out that she was a tough negotiator, she said, “That’s kind of what I do for a living.” When he followed up by asking what her husband thought about it, she responded, “Did you really just say that?”

Allianz Life Insurance’s 2019 Women, Money and Power Study (tinyurl.com/yaz2jmkp) found that 57% of the women surveyed said they wished they were more confident in their financial decision-making. A single mother of three children, Zajac said that “being in control of my finances has brought a lot of security and confidence to my life. The first time I bought a car or when I closed on my house, I was elated, because I accomplished it myself.”

So at what point should women become involved in their family’s finances (if they aren’t already)? Zajac said it depends on the individual’s situation, adding that “I think it’s all part of a woman’s self-awareness and self-worth journey.”

“One of the things I’ve been working on over the last couple of years is recognizing ‘You can do this,’” Zajac said. “Whatever path you’re on, I think that you start to become aware of those places where you give away your power, and those are the places you have to take back first.”

A Fidelity study released last year (tinyurl.com/y9ta6dsl) found that after the onset of the COVID-19 pandemic, a majority of the women surveyed (67%) said they were more engaged in managing their money. Among the other survey results were that women were taking steps to “better educate themselves” (36%) and had become “more comfortable talking about money” (35%). Ideally, employers should see this trend and look to enhance it by offering financial literacy seminars and bringing in speakers to talk to women in business. How important is it that companies have a role? 

“I think it’s important, especially for bigger companies, and I do think there’s a focus now,” Zajac said. “In America, there are certainly lots of conversations happening about pay equity. And there are lots of conversations about different types of leadership and the course of women in corporate America.”

“It's one of these areas that women are sort of hesitant to get into,” she said. “Like what do I need to know to financially plan for my future? What do I need to know to refinance my mortgage? Certainly, this is one of the places where I think corporations can help, as they are sort of the last bastion of true continuing education.”

If you want to share your expertise on a favorite topic, contact me at readers@juliejason.com.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Last week, we talked about “Ivan” and the challenges he faced 20 years after his grandparents gifted him stocks. If you recall, Ivan was thinking about selling the stocks, but first he had some hurdles to overcome. He had to find out his grandparents' cost bases (the original prices) for the various stocks he received as gifts decades ago. He also needed to find the cost bases of the additional shares he himself purchased through dividend reinvestments.

Depending on the records Ivan already had on hand, there potentially was a lot of work ahead for him. He would need to consult with a tax adviser or accountant to form a game plan for gathering the missing information.

Last week’s column focused on gifts. What about inheritances? E.B., a longtime reader of this column, wanted to know: “I had always understood that -- upon my death -- the stocks which my children will inherit will have the date of my demise as a cost basis. Am I wrong, or is the tax law different for gifted stock vs. inherited stock?”

E.B., thank you for asking. Here is a quick answer: Yes, the tax laws differentiate between stocks your children inherit from you and stocks that you gift to them during your lifetime.

First, before diving into the differences, let me remind you to be sure to talk with your tax adviser before taking any action. Each taxpayer’s situation is unique, and the tax laws can be complicated.

Now, let’s review some basics. First, what does the IRS say about inheritances? The resource is IRS Publication 551, “Basis of Assets” (tinyurl.com/ydy2pqmr). Under the section titled “Inherited Property,” you’ll see the paragraph:

“The basis of property inherited from a decedent is generally one of the following,” with the first situation enumerated being: “The FMV [fair market value] of the property at the date of the individual’s death.” There it is.

But, notice the word “generally.” Again, this is why you need your tax adviser at your side before taking any action.

You should be aware that the estate may choose to use an “alternative valuation date” other than the date of death. For more information, read the Instructions for Form 706 (tinyurl.com/ycn7q6xa); Section 2032 of the Internal Revenue Code applies (tinyurl.com/y974sp29).

The remaining situations address other assets, such as farmland, not stocks.

In most situations like E.B.’s, the cost bases of the stocks will be determined on the date of death (or an alternative valuation date), unlike a situation involving a gift.

As to whether an alternative date needs to be considered, your tax adviser will step in, since the decision depends on an individual’s particular tax situation.

The rules for inheriting a tax-deferred account, such as an IRA, are more complex, and that’s something I’ll discuss in a future column.

On another matter, if you are interested in the basics of retirement investing, join me for a virtual presentation, “You’re retired -- it’s time to revisit your financial plan.” It will be held on Wednesday, March 17, at 1 p.m. EDT, and is sponsored by the Greenwich (Connecticut) Library. To register, go to tinyurl.com/3paf657y or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Little did “Ivan” know that it would have been a good idea to record the cost bases (the original prices) of the five stocks his grandparents gave him 20 years ago, along with the cost bases of the dividends he reinvested in those stocks after receiving the gift.

Now that Ivan’s thinking of selling those stocks, the cost bases (showing up as all zeros on his brokerage statements) need to be researched and updated for tax purposes.

Why? To figure out capital gains taxes when the stocks are sold.

How? That’s the tough part. If you are in Ivan’s position, you’re pretty much on your own. It will be up to you to do some digging. You’ll need to go back in time to two periods, before and after the gift was made.

Step one is to confirm the number of shares of each stock received at the time of the gift.

Step two is to find out what the donor paid for the stock. In Ivan’s case, that’s the dollar amount his grandparents paid for each stock.

If Ivan’s grandparents filed a gift tax return at the time, there is your answer -- in the gift tax return you would find the basis, the number of shares and the date of the gift.

If there is no gift tax return, more is involved. The task at hand is to find the price paid by Ivan’s grandparents (the “carryover” basis). Things would be easier if the cost were based on the day that Ivan received the stocks, but that’s not good enough.

If Ivan can’t come up with this figure after doing research, the most conservative approach is to assume they paid nothing -- a zero cost basis. However, that’s taking an extreme position; zero is not the real cost basis, and taking that approach will trigger the highest tax liability.

Here is an example: Assume Ivan received 1,000 shares of stock A; he sells the stock for $100,000 ($100 a share). If we assume a zero cost (which you would not normally do), his gain would be $100,000.

On the other hand, if Ivan can demonstrate that his grandparents bought stock A for, say, $50 a share, his gain on the same 1,000 shares would be $50 a share, or $50,000.

If you are in Ivan’s situation, reach out to your accountant or tax adviser to help you design a way to be an efficient detective. The goal is to find the original cost or to build a case, with evidence, that supports a dollar figure that best represents the grandparents’ cost.

Now, let’s turn to additional shares Ivan purchased through dividend reinvestments.

Going back to stock A, assume that Ivan now has 250 additional shares above and beyond the original 1,000-share gift. He acquired these additional shares at different prices by reinvesting dividends when they were paid each calendar quarter over a 20-year period.

If the dividend reinvestments were done through a dividend reinvestment plan, the transfer agent for the stock will have a record. If the shares were deposited into a brokerage account, there may or may not be a record. Brokerage firms are now required to report purchase prices after 2011.

In any event, there is work to be done. Tax advisers will do their best to help guide your search. The scope of the search will depend on the amount of a potential gain. In de minimis (minimal) cases, you’ll do the best you can. When large dollar amounts are involved, you’ll have to weigh the cost of hiring professional help to figure out the cost bases.

You may be thinking, how can I avoid this fate if I receive a gift of stock? That’s easy. Keep good records.

This is the advice offered by Vanguard, one of the world’s largest investment management companies:

“An investor should always keep copies of statements and confirmations to accurately calculate cost basis. If reinvesting dividends and capital gains, keeping good records is especially important.”

For more information, read the IRS FAQs on cost basis, reinvested dividends and dividend reinvestment plans (tinyurl.com/yayqctbr).

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION