It's the extras that define tax-prep software

The two most popular tax preparation software packages are a lot like Coke and Pepsi, but this year they've added some new ingredients that make it easier to tell them apart.

H&R Block Inc. of Kansas City, Mo., is leveraging its vast network of offices and employees to provide help when users of its TaxCut software have tax questions. The company is also providing support or representation if a TaxCut customer faces a federal or state audit.

Intuit Inc.'s TurboTax beefed up its premier tax preparation software with a new tool that can calculate the cost basis of any stock being sold, a task that can be a nightmare if the stock has split several times or been gobbled up by another company.

The two initiatives illustrate the different underlying philosophies of the two companies. If someone gets stuck while preparing their taxes, H&R Block lets them fall back on its network of 12,500 offices and 90,000 employees, usually for a fee. Intuit of Mountain View, Calif., by contrast, seeks the technological rather than the personal fix with its software. I discovered both approaches have some drawbacks, but they show promise.

Many companies sell tax preparation software. Prices vary, with the cost partly dependent on the level of sophistication the user needs. For individuals with adjusted gross incomes less than $52,000, free tax software may be available atirs.gov or mass.gov/dor.

TaxCut's top-of-the-line product costs $60 and includes a federal and state e-file and one advice session with an H&R Block employee on one subject. Audit support is included with every TaxCut product.

TurboTax's top-of-the-line product costs far more -- $75 plus an additional $15 for each e-file. Tax advice from a human instead of TurboTax's own help files or video tutorials costs $40 more.

Both companies sell slimmed-down versions of their software, as well as online versions that cost less. The simpler your taxes, the less you should pay .

The approaches used by TaxCut and TurboTax are similar. The software poses a series of questions that help the user complete federal and state tax returns. The nice thing about them is that they're fairly easy to follow, unlike the tax forms issued by the Internal Revenue Service.

TaxCut's audit support includes help in researching what the IRS or state tax department is asking about, assistance in communicating with the agency, and help in preparing for the audit. An H&R Block employee will even go to the audit in the customer's place if that's what he or she wants.

"Worry-free audit support does not provide for the reimbursement of any taxes, penalties, or interest imposed by taxing authorities," the fine print on the TaxCut box says.

If you get stuck, advice from TaxCut is easy to get. Advisers with a minimum of three years experience are available 8 a.m. to 11 p.m. Monday through Saturday and 8 a.m. to 5 p.m. on Sunday. Send in your question by e-mail, and the H&R Block employee is supposed to get back to you by e-mail or phone within 30 minutes. Denise Sposato , a spokeswoman for H&R Block, said each tax advice session is confined to one subject, but the customer can ask as many questions about that subject as necessary. If the discussion shifts from child tax credits to depreciation, however, the customer is charged $20 for another session.

I posed a tough question -- how to determine the cost basis for 100 shares of The New York Times Co. The cost basis is the value of the stock when acquired. Cost basis is needed to determine a gain or a loss for tax purposes when selling stock. What made the question difficult is that the shares have gone through several transformations since they were purchased in the mid-1980s.

The stock I originally bought was in Affiliated Publications Inc., the former owner of The Boston Globe. That stock split several times and then was converted into The New York Times Co. stock when Times Co. purchased the Globe in 1993. Such revaluations alter the cost basis of the original purchase.

I e-mailed my question to H&R Block and received a call back within five minutes. Mary, my adviser, asked if I had any records showing how much I had paid for the stock and how its value had changed over the years. When I said my records were sketchy, her advice was simple.

"You'll just have to take your best guess," she said. "If you can't recreate it, neither can the IRS."

I put the same tax basis question to TurboTax's new BasisPro software, which was developed by the Waltham-based GainsKeeper division of Wolters Kluwer Financial Services. The software promises it will automatically calculate a stock's cost basis instead of guessing what it is.

The only information BasisPro needs is how many shares were sold, what they sold for, and when those shares were originally purchased. BasisPro claims to track splits, spin offs, and mergers back to 1950. It says it uses the same approach that the IRS uses.

But when I plugged in my information, noting that I had acquired the shares initially in two separate purchases, BasisPro calculated the cost basis as if I had purchased Times Co. shares in the mid-1980s instead of stock in Affiliated Publications.

I called Scott Gulbransen , a spokesman for Intuit, and explained the situation. He ran some tests and talked to the folks at GainsKeeper and ultimately concluded that share price data for Affiliated Publications was not available from the mid-1980s.

Gulbransen said data on stocks before 1990 is sometimes unavailable. Like Mary from H&R Block, he suggested I make an educated guess about the cost basis of the Times Co. shares.

TaxCut and TurboTax may be more alike than I thought.

Bruce Mohl can be reached at mohl@globe.com.