New Whitepaper Addresses Challenges in Meeting Cost Basis Reporting Requirements
The tax and legal experts at Wolters Kluwer Financial Services’ Capital Changes unit have released new strategies to help firms address some of the toughest cost basis reporting challenges that can emerge when reporting foreign corporate actions. The new white paper, Solving Foreign Corporate Actions Reporting Problems, explores two 2014 corporate actions that highlight issues brokers face when dealing with particularly complex and unusual tax consequences to meet these requirements.
“Foreign issuers rarely will provide any information about the U.S. tax consequences of an international corporate action, but this doesn’t absolve brokers of their responsibility for reporting accurate cost basis,” said Richard Ryndak, senior product manager for Capital Changes at Wolters Kluwer Financial Services. “This perspective reflects our long history of developing tax information and guidance on U.S. and foreign corporate actions in order to help brokers address some of the most challenging events every year.”
“Firms concerned about complying with the cost basis reporting law face numerous reporting challenges,” said Stevie Conlon, senior director and tax counsel with Wolters Kluwer Financial Services. “Without help from a trusted source with tax and corporate actions expertise, it can be incredibly difficult to obtain reliable tax information and minimize the risk of penalties. These are two critical components to helping firms maintain a focus on safe growth and profitability.”
“The cost basis reporting law was a game changer that generally requires brokers to consider the tax accuracy of the booking of corporate actions for all U.S. and foreign stock,” Conlon continued. “We expanded our product offering to include a new technology-driven product, Corporate Action Taxability Service (FCATS™), to complement our Capital Changes International product for comprehensive coverage of almost all foreign stocks.
Capital Changes International provides detailed coverage of the most challenging corporate actions, including those by foreign issuers with thorough explanations of U.S. taxability. FCATS provides rules-based U.S. tax determinations and back-office automation for almost all equities in its customers’ securities of interest. Together, Capital Changes International and FCATS provide a comprehensive and reliable third-party source for U.S. cost