New Cost Basis Reporting Is In Effect

The cost basis regulatory requirements were finalized in 2010 by the U.S. Department of Treasury and the Internal Revenue Service (IRS). The first phase of the requirements is now in effect for stocks acquired on or after January 1, 2011.

These new tax rules require brokers to report detailed gain or loss information and cost basis (the adjusted purchase price) when clients’ securities are sold, exchanged or transferred. Although these requirements primarily affect U.S. broker-dealers and certain other financial services firms, including Pershing LLC, they also affect clients’ security disposition choices. As a result, early planning is a must.

In 2010, Pershing made a number of enhancements to our operational services and technology platforms to support the cost basis reporting requirements. In 2011, Pershing will continue to make enhancements to support your business and reporting requirements. Pershing will also continue to actively monitor cost basis reporting developments and will share the new information with your firm as it becomes available.

Throughout 2010, we provided your firm with regular communications and educational resources regarding cost basis, and will do so in 2011 and 2012 as the cost basis reporting initiative continues. Please note that all of communications are readily accessible by clicking on the Learn More link within the Cost Basis section of the Communication Center homepage, available from the Resources tab in NetX360™.