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Linedata Expands Use of Wolters Kluwer Financial Services’ GainsKeeper Capabilities

Integration Simplifies Complex Tax Calculations for Straddles.

Linedata, the global solutions provider dedicated to the investment management and credit industries, today announced the expanded use of Wolters Kluwer Financial Services’ GainsKeeper® technology to help its mutual fund and hedge fund clients. With this technology, clients of Linedata Mfact are able to automate tax calculations that apply to straddles.

A straddle is an advanced trading strategy that involves holding long and short positions, such as buying both a put and call option, that essentially offset one another. It is used to help limit risk when there is speculation that a security will move significantly, but the direction is unclear.

Straddles are subject to certain tax rules that determine the character and timing of gains and losses realized which can be a concern for mutual funds and hedge funds. The rules require such detailed tracking of investments that they strain manually-based methods and resources. This means fund tax managers can often spend days making calculations in order to prepare financial statements and tax returns.

To help simplify this process, Linedata is integrating GainsKeeper FundTaxPro’s automated straddle tracking functionality with Linedata Mfact, Linedata’s award-winning full portfolio fund accounting solution for mutual funds, hedge funds, trusts, pension funds & third-party administrators. GainsKeeper FundTaxPro applies both of the distinct loss deferral rules for straddles and then tracks positions in future periods.

The straddle tracking capabilities complement other GainsKeeper FundTaxPro functionality currently integrated with Linedata MFact, including tracking, calculating and reporting of tax adjustments related to wash sales and Real Estate Investment Trusts (REITs).

“Straddle tax rules are very difficult and present a number of challenges for mutual fund administrators—many of whom are making calculations manually, which can lead to a significant margin of error,” said Peter Muldoon, Executive Vice President of Back Office Solutions at Linedata. “GainsKeeper automates an extremely complex process, helping prevent inaccurate distributions for the fund and potential IRS penalties.”

“Working with Linedata we have the opportunity to help more financial professionals in the fund community tackle their biggest and most time-consuming tax challenges,” said Chuck Ross, general manager of Investment Compliance Solutions at Wolters Kluwer Financial Services. “We are excited to expand our relationship with Linedata and work with their clients to ease the burdens of complicated tax rules.”