Welcome!
Welcome to Wolters Kluwer Financial Services’ Cost Basis Reporting
Resource Center—your source for essential cost basis reporting
law compliance information.
Cost basis reporting is law. Are you ready to comply?
With the cost basis reporting law’s initial effective date of January 1, 2011
less than one year away, it is critical that brokers, return preparers, tax
advisors and taxpayers take action now to comply on time. Further, it is essential
that impacted financial services professionals fully understand the proposed
regulations, issued December 16th, 2009 by the IRS, and consider the needed
actions immediately to be in compliance by January 1, 2011. Click
here to
read the proposed regulations.
Wolters Kluwer Financial Services has been a leader educating the industry
about this law and about the technology and information complexities that need
to be addressed to meet its requirements. Additionally, we offer both the tax
intelligence expertise and the technology to help you comply.
What You Can Find on the Cost Basis Reporting Resource Center
Know the law - Read
the law, the
proposed regulations, public
comments to the IRS whitepapers and
other important documents relating
to the cost basis reporting law.
Stay current - Access recent pertinent industry articles and webinar content.
Ask our experts - Send your cost basis reporting and corporate actions questions to our subject matters experts.
Read the Blog - Join industry leaders and peers on our BLOG for conversation around the law.
As we rapidly approach the initial basis reporting effective
date of January 1, 2011, how are you doing? According
to a recent Celent report¹, “…
The industry has wholly underestimated the amount of time
necessary to implement cost basis reporting solutions …
It is time for action from C-level executives.” ¹
¹Celent, Why C-Level Executives Should
Be Concerned About the New Cost Basis Reporting Rules by
David Easthope, Celent, September 2009.
According to Celent, “Due to the complexities related
to cost basis reporting, firms are tasked with the daunting
responsibility of implementing a sophisticated system to
meet these new requirements. Although many organizations
have some type of cost basis system in place, the new law
creates additional complexities in terms of the following:
wash sales, transfer of cost basis when a client switches
brokerage firms, and allocation and identification of tax
lots and sub-lots.”
Additionally, systems need the ability to handle all tax
lot relief methods allowed by the IRS (FIFO and specific
identification plus single-category and double-category
averaging for mutual funds and dividend reinvestment plans
– DRIP) for determining the basis of securities sold.
²Celent, Why C-Level Executives Should
Be Concerned About the New Cost Basis Reporting Rules by
David Easthope, Celent, September 2009.
There is a significant tax penalty risk if the basis and
holding period information reported on Form1099-B is incorrect.
There are separate penalties for 1099s provided to the
IRS and 1099s provided to taxpayers, and they aggregate
to $100 per incorrect 1099 (with an annual maximum of $350,000
per year before interest). If the error is due to intentional
disregard, the combined penalties are 10 percent of the
amount that should have been reported (without any maximum
limit).
On Friday, October 3rd, 2008, President George W. Bush
signed H.R. 1424, the Emergency Economic Stabilization
Act of 2008 into law (the Act, Pub. L. No. 110-343). The
law requires cost basis reporting by brokers to the Internal
Revenue Service (IRS) and to taxpayers. The initial effective
date for cost basis reporting for most stocks applies to
stock acquired on or after January 1, 2011; for mutual
funds and dividend reinvestment plan stock (or similar
arrangements) acquired on or after January 1, 2012; and
for debt instruments, options and other covered securities
acquired on or after January 1, 2013. The provision is
scored to raise $6.67 billion over a ten year period. To
review the law, click
here and go to Title IV, Section
403.
Click
here to read about key compliance challenges.
Click here to request a Cost Basis Reporting Law Readiness
Check List.
Click here to request the Celent Report, Why C-Level Executives
Should Be Concerned About the New Cost Basis Reporting Rules by
David Easthope, Celent, September 2009.
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Cost Basis
Reporting Blog
IRS Issues Proposed Cost Basis Reporting Regulations
On December 16, 2009, the IRS issued proposed regulations on cost basis reporting by brokers (the Proposed Regulations—REG-101896-09). The Proposed Regulations address key details regarding cost basis reporting for stock, dividend reinvestment plan stock and mutual fund shares, including permitted lot selection methods, optional reporting of pre-effective date (uncovered) shares, wash sales and other basis adjustments and other important rules.
Read More
What's New
IRS Issues Proposed Cost Basis Regs
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