Cost Basis Legislation
Recent IRS tax reporting requirements have shifted the authoritative source of cost basis tax reporting to custodians, impacting many investment advisors across the industry. As custodians are reporting this information to the IRS, advisors should no longer rely on cost basis information in their portfolio management system; instead, they should rely on the custodians for tax related information and data.
Portfolio Management and Tax Reporting
The process of entering and maintaining cost basis in portfolio management systems to align with the custodian is time consuming and cumbersome. Although the tax reports in PortfolioCenter will remain accessible and continue to function, you should rely on the custodian as the source of record for tax reporting to eliminate the need to maintain cost basis separately. Relying on a single source will not only significantly reduce time spent on data reconciliation, but will ensure accuracy and avoid client confusion.
To help you and your clients understand the changes and what is still accommodated in PortfolioCenter:
- Visit Schwab Advisor Services® for more custodian cost basis resources.
- For your tax estimation and portfolio statement reporting needs in PortfolioCenter the following documents provide you with suggestions on how to maintain synchronization with your custodian: