EES of 2008 mandates basis reporting (but not until 2011)

If you read through CCH's briefing to the end, you'll find the following tidbit:

"Reporting by brokers has been expanded. Brokers must report the adjusted basis of publicly-traded securities when reporting sales transactions and indicate whether gain is long-term or short-term. Securities subject to the new reporting requirement include stocks, bonds, debentures, commodities, derivatives, and other financial instruments designated by Treasury. Reporting will take effect for stock acquired in 2011, mutual funds acquired in 2012, and other securities acquired in 2013. The provision is estimated to raise $6.7 billion over 10 years.

Comment. Brokers will use the first-in, first-out (FIFO) method or the average cost method to determine basis, unless the taxpayer provides specifi c identifi cation of the securities being sold."

So, options traders are now going to have to be honest :), and this'll save preparers lots of hair-pulling. It'll be nice to (usually) be able to just have the numbers. Though of course we'll first have the problem of helping people with long-time holdings who have no idea of what their basis is calculate it so they can give it to the brokers when the broker asks for the basis of securities bought before the broker's basis tracking system came online. I also hope the industry comes up with a way to automatically transfer basis info as part of account transfers.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro
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Why would the brokers ask customers for basis for assets acquired prior to 2011? They don't have to report that, based on the CCH summary.

The challenges for database design and implementation will be formidable, but doesn't the IRS usually work with major players to come up with something that is actually implementable? For example, might there not by some type of hybrid reporting for sales of assets, some of which were acquired before the implementation date, and some after?

Also, outside of retirement accounts, aren't transfers between brokerages usually effected by a sale and repurchase?

Let's hope the reporting system has more reliability than the 1098-T for tuition!

-Mark Bole

Reply to
Mark Bole

Having just recently gone through this when my broker changed firms, all of the basis information was transferred to the new firm. I was told by my broker that this was required, either legislatively, or by an agreement amongst most/all of the major brokerage firms, although I believe it was by law. That would probably be securities law, rather than tax law. He mentioned something about them having 90 days to provide the information to the new firm.

Reply to
Bruce E. Cobern

I wonder what happens if you ask for a security to be transferred directly to you, and out of your broker's account.

Reply to
Gil Faver

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