Investors need cost basis information to properly report gains or losses when filing tax returns and to determine unrealized gains or losses. Interactive Data automates and streamlines the research of cost basis information and delivers adjusted cost basis calculations.
With the passage of the Energy Improvement and Extension Act of 2008 (Emergency Economic Stabilization Act of 2008), broker dealers will be required to report adjusted cost basis beginning in 2011 and Interactive Data can provide the information to help meet this new requirement.
Interactive Data delivers high-quality information on the tax and cost basis impact of corporate actions, easing the burden of determining capital gains on investments. Spin-offs, mergers, distributions, stock splits, and numerous other corporate actions can have a significant impact on the cost basis of a security. Investors, tax advisors, and brokerage firms have historically had a difficult time collecting cost basis information due to the difficulty of tracking ownership and the impact of corporate actions over time.
Interactive Data analyzes corporate actions that can impact a security’s cost basis, and electronically publishes this information to help securities and tax professionals update, maintain, and derive records to reflect these events. Electronic publishing options allow users to access the information in a variety of ways, making information available, when and how a client needs it.
The Interactive Data cost basis calculator provides the ability to automate the calculation of adjusted cost basis taking into account corporate actions during the period specified by the client. Subscribers simply enter the security identifier, the buy and sell dates, the quantity, and the purchase price. The cost basis calculator will return a bottom-line cost basis per share and aggregate cost figure, taking into account cost basis-affecting events during the period. Calculator results also show the cost basis of securities that may have emanated from the original position as the result of mergers, spin-offs and distributions. Equipped with historical daily prices and dividends, the calculator will allow for multiple tax lots and can account for dividend reinvestments.
Interactive Data Cost Basis Service offers end-of-day files for automated transmission of critical data attributes, as well as intra-day alert options that include portfolio tracking of specific cost basis affecting events.
Interactive Data Cost Basis service:
- Comprehensive database captures information on events that may have a tax or cost basis impact; covers U.S. equities, ADRs, fixed income instruments and mutual funds
- Historical pricing and dividend history dating back to the1960s to help identify original cost and for dividend reinvestment calculations
- Web-based tool enables clients to easily monitor daily cost basis affecting events, create portfolios to track specific instruments or events, and receive customized reports
- Data available in a range of formats and delivery systems to meet clients’ needs
- Sophisticated calculator can enable clients to quickly calculate cost basis information throughout the day
- An issuer’s tax opinion and the issuer’s tax status, allocation factors, fair market value and resulting positions
- Security identification tools (CUSIP directory) and “family tree” to help identify the starting security
The Evolving Nature of Corporate Actions – contributed blog post by Charlie Price for the SWIFT Dialogue Website, March 2013