Cost Basis Reporting

On October 3rd, 2008, legislation was passed under the Emergency Economic Stabilization Act of 2008 that has a substantial impact on many areas of the financial services industry. As part of the new legislation there will be more stringent requirements on financial intermediaries such as issuers, transfer agents, brokers, banks and mutual funds, to report customers’ basis in securities transactions. Due to the many complexities of implementing the various types of financial instruments, legislation will be implemented in three stages:

• Equity stock acquired on or after January 1, 2011
• Mutual funds and dividend reinvestment plans (DRiP) shares acquired on or after January 1, 2012
• Other security types, such as debt issues, options, private placements acquired on or after January 1, 2013

The industry will face several challenges to implement compliant solutions. Properly allocating basis for corporate actions events, ensuring wash sale rule logic is in place, providing clients’ open tax lot and cost basis information when accounts are transferred, and accurate IRS reporting are some examples. Davidsohn Global Technologies has experienced consultants and proven technology solutions that can assist clients in gaining compliance and meeting these mandatory objectives.

Professional Services – Business and Technology Consulting

Davidsohn Global Technologies, Inc. has experienced business analysts that can work with you to understand the complexities of the new cost basis legislation and assist in defining required changes for compliance.

Cost Basis Reporting Software Solutions

The Davidson ATTLAS product offers clients a full functioning Cost Basis Reporting solution that identifies and adjusts for wash sale transactions and adjusts basis for corporate action events to provide accurate cost basis reporting.

Cost Basis Reporting Validation Services

Clients implementing proprietary cost basis solutions can use the Davidsohn ATTLAS Cost Basis Validation Services to verify cost basis reporting results prior to reporting to the IRS. This will enable companies to avoid substantial penalties from the IRS for inaccurate reporting.

Cost Basis Reporting Aggregation Services

Clients may hold accounts at several brokers where cost basis reporting is the responsibility of the various brokers. Reporting could also be aligned where the taxpayer has responsibility that brokers would not be capable of reporting. Davidsohn Cost Basis Reporting Aggregation Services can be used to consolidate both broker reporting across brokers and can also consolidate broker and taxpayer reporting.

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