This interactive community offers insight into our products, services and thoughts on the issues impacting your business. Feel free to join in the discussion.
With mandatory cost basis reporting deadlines on the horizon, operations executives are being challenged to formulate new cost basis strategies to support this new era of reporting. The impact of mandatory reporting will go far beyond reporting itself, changing many ways in which firms interact with clients. From major system upgrades to business process reengineering, learn what leading firms are doing to prepare and gain insight into how they plan to use accurate cost basis information to support the ever-changing demands of the retail investor and networks of financial advisors. Moderated by Scivantage, this interactive panel discussion will explore cost basis best practices and new technology innovations that can help to provide a sustainable competitive advantage for your firm.
Panelists:
Martin Bentsen
Chief Operating Officer
Computer Research Incorporated (CRI)
Brian Godfrey
Vice President Client Reporting Operations
Charles Schwab & Co. Inc.
Next Monday (March 2) is the deadline for submitting comments to Note 2009-17, which is seeking feedback on some of the lingering issues with mandatory basis reporting. Based on comments received, the Department of the Treasury and Internal Revenue Service will issue guidance on the new basis rules and reporting requirements. The Note invites public comment on 36 issues ranging from specific lot identification to account transfers. The Note in its entirety can be found here.
To help financial institutions stay current on the latest news surrounding the cost basis reporting law, Scivantage has launched an online knowledge base at www.basisreporting.com.
This interactive community offers insight into our products, services and thoughts on the cost basis issues impacting your business. Here you will find a range of resources including the latest happenings with the mandatory reporting legislation, industry expert blogs, best practices, customer success stories and self-service support tools to help your firm navigate the changing regulatory landscape.
Changing Regulatory Landscape: Requirements Every Financial Institution Must Address to Comply With Mandatory Reporting Rules
Live Webinar Event: Wednesday, Nov. 19 @ 4:00 PM EST
In just a short time, brokerage firms and mutual fund companies will be required to track and report adjusted cost basis to both their clients and the IRS. Doing so will require major system upgrades to support corporate action adjustments, wash sale treatment, and proper lot relief methodologies. Failure to properly address even a single component of cost basis will result in significant penalties and disgruntled clients.
Scivantage, a leader in providing automated, adjusted cost basis solutions to the financial services community, will host an in-depth discussion on the new legislation and provide insight into how the latest technology innovations can help ensure your firm is ready to comply.
Register today for this free, live webinar to take a closer look at how Scivantage’s Maxit solution can help reduce operational costs, deliver a substantial competitive advantage and ensure compliance in a rapidly changing regulatory environment.
Key topics covered during this webinar will include:
- Discover key aspects of this new legislation and uncover mandatory changes that will require immediate attention
- Learn how some leading firms are quickly gaining a cost basis advantage, regardless of the legislative mandate
- Gain an understanding of the complex data management model required to comply and see why Maxit is the industry’s most accurate solution
- Examine an effective implementation model—5 keys questions to determine your firm’s readiness
* Complimentary Cost Basis Reporting Readiness White Paper — All webinar attendees will receive a free copy of our Cost Basis Readiness White Paper, which provides a roadmap for financial executives formulating new cost basis strategies in this new era.
On Friday, President Bush signed into law, as part of the Emergency Economic Stabilization Act of 2008 (H.R. 1424), mandatory basis reporting for brokerages and mutual fund companies. Beginning with stocks purchased after January 1, 2011, brokerages and mutual fund companies will be required to provide adjusted cost basis to both investors and the IRS. Mandatory reporting will be extended to shares in mutual funds purchased after January 1, 2012, and for debt instruments, options and other securities purchased after January 1, 2013.
After bouncing from one bill to another over two years, basis reporting was finally enacted when the extenders bill it was tied to was included in H.R. 1424, partially as a political maneuver. However, it happened, brokerages and mutual fund companies now must find serious solutions to the complex issue of maintaining accurate cost basis. Maxit’s clients are leading firms that recognized the need of providing fluid cost basis to clients and advisors. Many other firms, however, fail to recognize the strategic value of providing accurate adjusted cost basis and have settled for the “estimated” version of cost basis offered by back offices and other vendors. These firms will need to revisit their existing strategy as they decide whether to upgrade cost basis services to the bare minimum of the basis reporting requirements, or whether to truly make cost basis and tax management tools a key strategic differentiator for their firms.
After being tied to such disparate bills as farming, military and energy, basis reporting has now been added to HR 1424, the finance bill most will simply refer to as “the bailout”. It’s worth noting that basis reporting was not added as either increased regulation or a spending offset (scored at $6 billion over 10 years, it wouldn’t be much of an offset to the $700B bailout anyway). It was attached to the finance bill when an extenders package was tacked on following the House defeat last weekend. The finance bill has passed the Senate (74-25) and it’s now back to the House for a vote on Friday. Insiders say it will pass, but after this week nothing is certain. If the bill does pass, and basis reporting isn’t removed, all investors will benefit from a huge record-keeping relief.
Most of us ended our summer vacations months ago, but Congress just returned yesterday. Before they hit the beaches, Basis Reporting had been included in the “Jobs, Energy, Families, and Disaster Relief Act of 2008″ (S 3335). Speculation now is that Basis Reporting will still likely pass, but possibly not until after the November elections.
It’s been a hard twelve months for investors. As if the stock market hasn’t caused enough pain, the IRS issued two opinions that close loop holes for investors. Back in December the IRS put investors on notice that a wash sale does occur when a security is sold for a loss in a taxable account and repurchased in an IRA within 30 days (a particularly painful thought, since the deferred loss can never be recovered from an IRA).
And now it’s going to be even harder to file taxes as a professional trader. On August 11th, Judge Vasquez of the US Tax Court issued an opinion that could impact many investors. A Florida couple set up Alpha Trading Company and filed taxes as professional traders. Professional traders have the advantage of being able to write-off many expenses (they also use mark to market accounting, can take more than the individual limit of $3,000 in losses, but can not take advantage of the 15% long-term tax rate). Alpha Trading made approximately 300 trades per year. The Tax Court cited another ruling that suggests over 1,100 trades must be made for an investor to be considered a trader. The court also determined that the bulk of the trades were not made to take advantage of market swings. In fact, many trades were held over 31 days and the investors rarely purchased and sold stocks on the same day. The court also found the couple traded on only 63 days (a relatively small percentage of market days).
This case further demonstrates that the IRS will be giving much more stringent strutiny to tax filings by investors.
To support their growing independent advisor business and to streamline advisor workflow, Scottrade has selected Scivantage Professional to power their Advisor Services’ next-generation, advisor desktop platform. Scivantage Professional provides Scottrade Advisors with an integrated suite of applications that support their unique workflow—from opening/maintaining brokerage accounts and executing complex trade orders to proactive management of client portfolios from a single, browser-based interface. Scottrade Advisors will also have access to Scivantage Maxit, the most complete cost basis, tax management and portfolio reporting solution, to enable timely and effortless investment tax decisions.
To learn more about Scottrade’s selection and what it means for Scivantage, read the latest press release.
Adnane Charchour, President and CEO of Scivantage was selected by an independent panel of judges to receive the Ernst & Young Entrepreneur Of The Year® 2008 Award for New Jersey. The award was presented at a gala event at the Marriott Teaneck at Glenpointe on Thursday, June 19, 2008.
View the video highlights of the event ceremony.
Congratulations to Adnane on this tremendous accomplishment. Next up, the national event in November. Read more
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