StockBrokers.com

New IRS Investor Cost Basis Reporting Law for 2011

• Tweet

• Tweet

Beginning Jan 1st of this year, the IRS now requires all U.S. based brokerages to track the cost basis for their investors on all equity transactions. In addition, brokers are also required to send the IRS and investor an annual statement indicating when positions where sold off. The Investment Company Institute indicated approximately 46% of U.S. households retained equities in 2010.

Essentially this new law is forcing investors to declare the the purchase date & price of an equity when they sell off all or a portion of their total position. The total gains and losses in all trading activity are then reviewed for the year and proper taxes applied. Various brokers are also offering several default cost basis reporting options for their clients in order to simplify the reporting process. For example, TD Ameritrade has already implemented the ability for clients to choose their cost basis reporting when placing trades.

For further reading on this topic Morningstar has posted a good detailed article.

Related Posts

• Comparing the New MB Trading Account Types
• Definition of the Week: Stop Order
• Top 8 Most Active Stock Brokers 2009
• Stockbrokers.com Ratings Now on Investimonials.com
• Paying too much for trades? Over 2,000 Investors Aren’t Anymore!