Since the firm’s inception, we have placed considerable focus on obtaining and maintaining the accuracy and integrity of our clients’ cost basis data. As an investment advisor, we believe that preserving this data is critical to our clients, their tax professionals, and the investment management process. Recent legislation has resulted in significant changes in cost basis tax requirements for account custodians, such as Charles Schwab & Co, Inc (Schwab). Custodians are now required to report cost basis and the corresponding gain or loss directly to the IRS in a phased approach:
These changes will impact investors’ tax return filings with new forms and requirements. Schwab has provided resources regarding changes to their revised 1099 Composites: FAQs regarding the new 1099 and a sample 1099 Composite.