Stepped-up Cost Basis Incorrect on Inherited Stock - What can I do?

This is a common issue with inherited securities. You're absolutely right that you should receive a stepped-up cost basis to the fair market value as of the date of death for ALL the inherited securities, not just some of them. If you need to sell before the brokerage corrects their records, you can still report the correct stepped-up basis on your tax return, regardless of what the 1099-B shows. When you file your taxes, you'll complete Form 8949 (Sales and Other Dispositions of Capital Assets). There's a column to adjust the basis with a code "B" which indicates the basis reported to the IRS is incorrect. You'll enter the correct stepped-up basis and calculate your gain/loss using that figure. The key is keeping good records. That Date of Death Valuation document you have is crucial evidence if there's ever a question. I'd also recommend documenting your attempts to get the brokerage to fix the issue - save emails, note dates of phone calls, names of representatives, etc.

I had the same exact problem last year with Merrill Lynch after my mom died. I found that using https://taxr.ai really helped me sort things out. I was pulling my hair out trying to get the brokerage to fix the cost basis on about a dozen stocks, and I had already sold some before I realized the problem. The taxr.ai system analyzed my statements and the death valuation document, then generated a detailed report that showed the correct basis figures for everything. It even helped me create a proper adjustment record for my tax return. I was able to sell what I needed with confidence knowing I had proper documentation to back up my position.

I initially had doubts about using taxr.ai for my inherited stock issues, but after spinning my wheels with Schwab for three months, I decided to give it a try. It was honestly a game-changer for my situation. The system helped me identify exactly which securities had incorrect basis information and generated a comprehensive report showing what the stepped-up values should be based on the death date. I was especially impressed when they pointed out some securities I hadn't even realized were incorrectly reported. The documentation they provided gave me the confidence to file my taxes correctly despite the errors on my 1099. I've sold several positions since then and had no issues with the IRS even though I had to make adjustments to what was reported.

I've been through this nightmare with multiple brokerages. The fastest solution I found was using https://claimyr.com to get through to the right department at the brokerage. I spent weeks calling E*Trade's regular customer service with no progress, but Claimyr got me connected to their cost basis department in under 10 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The regular customer service reps often don't understand the complexities of stepped-up basis for inherited securities, but the specialized departments do. Once I got to the right people, they fixed the issue within days. Might be worth trying before you sell anything.

I was completely skeptical about Claimyr at first - I've been around long enough to doubt these "miracle solutions." But after spending literally hours on hold with Fidelity trying to fix my inherited IRA cost basis issues, I decided I had nothing to lose. I tried it, and I'm still shocked at how well it worked. Got connected to Fidelity's specialized estate services team in about 15 minutes. The representative immediately understood my issue and initiated the correction process. Two weeks later, all my securities showed the correct stepped-up basis. I've since sold several positions and the 1099 came out correct. Sometimes you need to get past the front-line customer service to the specialists who actually know how to handle these situations. Lesson learned for me.

Another option is to contact FINRA if the brokerage continues to drag their feet. Brokerages are required to maintain accurate cost basis information, and FINRA takes these issues seriously. I had to do this with TD Ameritrade last year, and suddenly they became very responsive once FINRA got involved. Also, keep in mind that for mutual funds, there might be different lots purchased at different times, so some complexity is normal - but they still need to get it right!

Has anyone here dealt with incomplete cost basis info on inherited stocks from decades ago? My dad left me some AT&T shares that have gone through all those splits and spinoffs, and I have zero idea what the original cost basis was.

I went through something very similar with Fidelity when I inherited my grandmother's portfolio last year. The key thing that finally got them moving was when I referenced the specific IRS regulations they're required to follow. Here's what worked for me: I sent a formal written request (via their secure message center) citing IRS Publication 551 and specifically mentioned that under IRC Section 1014, inherited property receives a stepped-up basis equal to fair market value on the date of death. I also referenced Treasury Regulation 1.1014-1 which requires this for ALL inherited securities, not just some of them. I attached my date-of-death valuation document and gave them a 30-day deadline to correct the records or I would file a complaint with FINRA. Within two weeks, all 23 of my securities had the correct stepped-up basis. Sometimes you need to speak their language and show you know the rules they're supposed to follow. The documentation you have showing the securities' values on your uncle's date of death is exactly what you need. Don't let Vanguard's delays cost you money - you have every right to demand they fix this correctly.

I'm dealing with a very similar situation right now with inherited mutual funds from my father's estate. What I've learned through this process is that you have multiple options to protect yourself, even if Vanguard doesn't fix their records before you need to sell. First, definitely keep pushing Vanguard using the formal approach others have mentioned - cite IRC Section 1014 and Treasury Regulation 1.1014-1 in writing through their secure message system. Give them a specific deadline. But if you need to sell before they fix it, you're not stuck with the wrong tax treatment. When you file your return, you'll use Form 8949 and can override whatever the 1099-B shows. Code "B" is specifically for when the basis reported to the IRS is incorrect. You'll enter the correct stepped-up basis and calculate your actual gain/loss from there. The date-of-death valuation document you have is your golden ticket - that's exactly the documentation you need to support the correct basis. I'd also recommend taking screenshots or getting written confirmation of the current incorrect cost basis shown in your account, so you have clear before/after documentation of the discrepancy. Don't let their administrative failures cost you thousands in unnecessary taxes. You inherited those securities with stepped-up basis as of the date of death, and that's what you're entitled to report regardless of what their systems show.

I went through almost the exact same situation with Charles Schwab when I inherited my aunt's portfolio. What finally worked for me was a two-pronged approach: formal written pressure on the brokerage AND preparing backup documentation for tax season. For the brokerage side, I sent a certified letter (not just secure messaging) to their compliance department referencing IRC Section 1014 and demanding correction within 30 days. I included copies of the death certificate, date-of-death valuations, and my previous unsuccessful attempts to resolve the issue. The certified mail created an official paper trail they couldn't ignore. For the tax side, I worked with a CPA who specialized in estate issues. She showed me how to properly document the stepped-up basis using Form 8949, even if the 1099-B was wrong. We created a detailed spreadsheet showing each security's correct basis versus what Schwab was reporting, along with supporting documentation. The key insight she shared: the IRS expects these discrepancies with inherited securities and has specific procedures to handle them. As long as you have proper documentation (which you do with that date-of-death valuation), you're in good shape. In my case, Schwab finally corrected about half the securities after the certified letter, but I still had to override several on my tax return. No issues with the IRS, and I saved thousands in unnecessary capital gains taxes. Don't let Vanguard's incompetence cost you money - you have all the tools you need to handle this correctly.

I'm a tax professional and see this stepped-up basis issue constantly with inherited securities. You're absolutely right to be frustrated - Vanguard (and other brokerages) often struggle with proper implementation of IRC Section 1014, especially when multiple securities are involved. Here's what I tell my clients in your exact situation: Document EVERYTHING now before you sell anything. Take screenshots of each security showing the incorrect original purchase dates and basis amounts. Print or save copies of your account statements showing these errors. This creates a clear paper trail of the brokerage's mistakes. The date-of-death valuation document you have is perfect - that's exactly what the IRS expects to see as support for stepped-up basis. I'd also recommend getting a written statement from the estate attorney or accountant who prepared that valuation, confirming these were the fair market values on your uncle's date of death. When you do sell securities (whether Vanguard fixes their records or not), you'll report the correct stepped-up basis on Form 8949 using Code B if the 1099-B shows incorrect information. I've helped hundreds of clients do this and it's routine - the IRS has specific procedures for these brokerage reporting errors. One additional tip: Send Vanguard a formal written request through their secure messaging system citing IRC Section 1014 and Treasury Regulation 1.1014-1. Reference your uncle's date of death and attach your valuation document. Give them 30 days to correct all securities or you'll escalate to FINRA. The regulatory pressure often works when customer service calls don't.

I'm going through this exact same nightmare with TD Ameritrade right now! Inherited my mom's portfolio in September and only about half the securities show correct stepped-up basis. The rest still show her original purchase dates from the 1990s. What's really frustrating is that TD Ameritrade's customer service keeps telling me "it takes time to process" but it's been 4 months already. I've documented every phone call and they keep passing me between different departments. Reading through all these responses has been incredibly helpful - I had no idea about the formal written request approach citing IRC Section 1014. I've just been calling their regular customer service line like an idiot. Going to try the secure messaging route with specific regulatory citations and a 30-day deadline. The reassurance about Form 8949 and Code B is huge for me too. I was terrified about selling anything before they fix their records, but knowing I can override their incorrect 1099-B reporting gives me peace of mind. I have all the date-of-death documentation from the estate attorney, so I should be in good shape. Thanks everyone for sharing your experiences and strategies - this community has been more helpful than months of phone calls with the brokerage!