SunGard Data Systems Inc. this week launched its Cost Basis Reporting Engine, which is intended to help financial services companies and institutions with required tax lot accounting. The product, according to SunGard, can work with any back-office system or combination of systems to meet new cost-basis-reporting requirements.
The Emergency Economic Stabilization Act of 2008 states that financial intermediaries must report cost basis to the Internal Revenue Service and to taxpayers for trades and transactions involving fund investments as of Jan. 1, 2011; fund companies have until 2012 to comply. Wirehouses already track this data, and custodians aren't required to comply with the legislation.
That has left broker-dealers, mutual fund companies and fund custodians to wrestle with how best to update their systems to comply with these requirements.
Advisers may soon be using the new cost basis engine through their broker-dealers or other technology providers, as it also integrates with multiple SunGard solutions, including WealthStation, a wealth management platform used by many advisers.
The engine provides for automatic processing of cost basis calculations including corporate actions, option assignment and exercises, and wash sales; it can also recalculate for mutual fund reclassifications and has support for automated customer account transfers. There is also a utility for automatic generation of realized/unrealized gains and losses, calculations on average mutual fund cost, and tax lot relief in “first in, first out” and specified lot processing.
In addition, the Cost Basis Reporting Engine is integrated with Compliance Plus, SunGard's tax-information-reporting service, which provides information for basis adjustments over time and also incorporates the engine's basis calculation into 1099-B reporting.
For more information, visit SunGard's
Cost Basis Reporting Engine and
WealthStation web pages.
