As I indicated on a Wordpress blog recently, retirees who have inherited securities in estates (usually from relatives) should be careful negotiating them for cash, and make sure that even with bond funds or similar instruments that they report basis value on tax returns (on the 8949’s ) and do the necessary research online of the individual securities if the financial institution reporting the account didn’t report it.
It is common for some funds originated before 2011 not to have recorded bases (I was told by UBS).
I missed one of these in 2017. At one point I had an 11800 tax bill. When I supplied the bases and fixed some other genuine problems (unrelated) that I found, I owed about 3400. I paid that (online) and the IRS finally settled.
But the IRS wouldn’t change the adjusted gross that it had computed without the basis change (when supplied, the reportable income increase,was only about $120) , and this is still what is reported to Virginia for state income tax. So I wound up paying tax on the full value of the security sold to VA, not just the increase in basis.