Lootman wrote:So I maintain that for the way I trade I have no need to document the number of shares. ...
Yes - the only real problem was that what you originally said was "
Actually you don't need "number of shares" nor "sales price" nor "average purchase price" for reporting gains and losses." (in
viewtopic.php?f=31&t=10718&start=20#p126398). That reads as telling other people what
they need to do, and it omits to say "
First start trading the way I do. Then..."!
Lootman wrote:... It may be an input into a calculation but it doesn't need to be recorded or submitted.
This may be just a question of using "record" and related words differently, but as far as I'm concerned,
recording information is no big deal in these days of electronic communications and storage -
processing it might be if the processing required cannot be easily automated, but not simply putting it into one's records. E.g. when I do a trade, my broker sends me either a contract note or a notification that it's available on their website. Either way, putting a copy of it into my files takes a matter of seconds, and I've then recorded all details of the deal - it would actually take
longer to record it without the number-of-shares information than with that information, because the latter would involve processing it to remove the information!
Back in the days of paper communications and storage, it was more of a problem: the paperwork built up to a very cumbersome volume over the years. But nowadays, I find that the most efficient way for me to deal with communications from financial providers is basically a quick initial sort into a few categories - for brokers, for instance, they go into a general "Short Term" folder for anything that clearly will no longer be relevant to anything at all after 3 months, or broker-specific "Statements", "Contract Notes", "Corporate Actions" or "Other" folders. Apart from the "Short Term" stuff, it will probably stay around in my records permanently - I may well never look at it again, but clearing out stuff that has ceased to be wanted at all adds more work than it saves! And unlike with paper records or the situation in the early days of electronic communications, storing it all doesn't create any significant inconvenience, nor is likely to do so in the future - my entire electronic financial records fit on one memory stick, and by the time they grow to no longer do so on current memory sticks, I've little doubt that available memory stick capacities will have grown to make them still do so!
Lootman wrote:... my broker maintains cost basis information such that, if I sell 50% of a holding then the cost basis on the remaining lot is changed to 50% of the original. (Brokers sometimes fail to make the correct adjustment for corporate actions, but in my experience they handle buys and sells correctly).
I feel I should point out a couple more flaws with relying on brokers to maintain cost-basis records for one: first, it won't be good enough for some taxpayer special circumstances - for example, changing between being UK-tax-resident and not, or also having other taxable holdings of the same shares. Both of those basically require full transaction records that the client can process to take account of the special circumstances, and/or the client being able to provide the appropriate details of how their circumstances change.
Secondly, and probably more relevant to most people, brokers occasionally exit the business and transfer their clients to other brokers (*). One would of course hope that such a transfer would include the transferor broker making the cost-basis information available to the transferee broker and the transferee broker registering it as the cost-basis information of the transferred holdings (rather than e.g. their market values on the day of the transfer). But my experience of even the better financial providers is such that the operative word in that is definitely "hope" rather than "expect"!
That's easily dealt with either by routinely making records of whatever the broker sends one, or by specially making records of everything the transferor broker has on their website about one's account before it ceases to be available. I.e. it's an easily-overcome flaw as long as one is aware of its existence, and only becomes more major if one lets it slip by one... But that's not all that unlikely for long-term shareholdings, because the relevant cost basis may have been acquired long before CGT became at all relevant to one.
Indeed, I'm affected by that form of the second flaw myself in one minor respect: some of my SSE shares are ones I bought in the early 1990s (as shares in Scottish Hydro-Electric - the company has been renamed twice since, once during its merger to form Scottish & Southern Energy and then later to shorten the name to just SSE). At the time, I basically just bought shares in privatisations and kept the certificates in a drawer, but my holding of Scottish Hydro-Electric was particularly disappointingly small and I responded to an offer of a one-off certificated dealing service to either sell one's shares or buy more. I received a contract note, which I'm fairly certain I've never chucked out - but CGT wasn't even looming on my horizon at the time (it basically appeared there and reached me over just a couple of years in the late 1990s as a result of the tech boom), and so I didn't attach any great importance to it, just kept it in a pile of miscellaneous financial papers. And it's gone missing... Almost certainly simply mislaid and will turn up somewhere totally unexpected, but until it does, I won't know exactly what my cost basis for those SSE shares is. It does mean that I'm glad I haven't felt any serious need to sell any SSE shares for the last 10 years (I did sell some before that, but the CGT rules then in effect didn't identify the shares concerned as being even partially among the shares I sold). If necessary, I could of course deal with that by coming up with a low estimate of their cost basis, or even an estimate of zero, and accepting that I would pay a bit more CGT as a result, but I'd prefer not to have to...
(*) Generally they allow the clients to say which broker they want to be transferred to, but have a default transferee broker - which is presumably essential to be able to deal with clients who simply won't respond.
Gengulphus