Broker Check

Cost Basis reporting is now required for "Non-qualified" (ta

| March 07, 2013

The How-To Articles

When Your Broker ‘Outs’ You . . . . Wall St Journal

The Lead Comment

In my opinion, here’s the most important part of the above article:  “Remember: If your investment is held within an individual retirement account, Roth IRA, 401(k) or other tax-sheltered retirement plan, it isn't subject to cost-basis reporting.”

To me it seems hard to believe, but up until very recently, investment firms were notrequired to report “Cost Basis” information on taxable (e.g. “Non-qualified,” e.g. non-IRA) accounts.  Now, they (we) are!
What about all those years before investment firms were required to report? “Investment firms must track and report cost basis for sales of stocks bought on or after Jan. 1, 2011. For mutual funds, many ETFs and DRIPs, the requirement applies to purchases since the start of 2012.”  “For example, if you bought a stock in 1978 and sold it last year, your brokerage firm needn't report the cost basis to the IRS. If you bought the stock in 2011 and sold in 2012, the firm does.”

If you have questions call your financial professional!

The Finance – Economic – Political Articles

GOP Takes Back Tax Reform . . . . Wall St Journal

Budget Spat Swamps Agenda . . . . Wall St Journal

Cuts to Achieve Goal for Deficit, but Toll Is High . . . . New York Times  “If the latest cuts stick, the two parties will have achieved nearly the full amount of deficit reduction over the next decade that economists and market analysts have promoted.”  “It does not add up to the “grand bargain” that the two parties had been seeking, because it leaves virtually untouched the entitlement programs — MedicareMedicaid and Social Security” 
“ . . . . said Vin Weber, a Republican former congressman. “The fact we’ve gotten to a $4 trillion deficit-reduction deal without tackling entitlements is almost a bad thing”

My Comments & Opinions:  Sequestration it seems, may stay in the headlines for some time.  Somewhat buried in the “all sequestration, all the time” news was to me, news of much greater importance, i.e. “GOP Takes Back Tax Reform.” (Please see article above.)  Again in my opinion, the unfortunate / sad situation is that our current tax code is neither fair nor “pro-growth.”  I will not here at this time go into many of the specifics.  In general, I share the view of economists who feel that growth is most encouraged by a tax code that supports a “level playing field.”  An obvious example:  If you are a business owner or independent contractor too young for Medicare, you must pay for your own health insurance with no tax break.  If you happen to be an employee of a corporation that provides you health insurance, you get a substantial tax break on employer-supplied health insurance.

These tax breaks are so numerous throughout our economy that if they were all eliminated, we could substantially reduce tax rates without reducing total tax revenue– which – according to the article above – will be the goal.  The reality in these situations is that, even with possible rate reductions, some people’s taxes will go up – and perhaps substantially.  The politicians’ difficult job will be to somehow convince those whose taxes are going up that whatever tax reform ultimately passes will be good for them, as well as good for the country!

In Budget Battle, Sequester Cuts Both Ways . . . . Wall St Journal

Other Reads

The Third Industrial Revolution . . . . Real Clear Markets