New Stand Alone Debt Solution Accommodates Phase 3 Cost Basis Reporting Compliance
Wolters Kluwer Financial Services today introduced GainsKeeper CompleteDebtTM, a stand-alone cost basis reporting solution for debt that features the comprehensive functionality already available on its GainsKeeper enterprise cost basis reporting compliance system. This stand-alone solution provides an option to brokers who may have already invested significantly in cost basis systems for Phases 1 and 2 compliance, but still need to rapidly implement the extensive debt functionality required to meet the approaching Phase 3 effective date. Unlike other systems currently available on the market that provide only a few of the elements needed to compute required amounts, GainsKeeper CompleteDebt solves for all the cost basis information required for Form 1099 reporting.
“GainsKeeper CompleteDebt offers comprehensive cost basis reporting compliance debt functionality to brokers who otherwise had limited options for meeting the Phase 3 requirements on time,” said Chuck Ross, vice president and general manager of Investment Compliance Solutions at Wolters Kluwer Financial Services. “By implementing this stand-alone system, brokers add all of the critical debt-related components they need to generate the actual cost basis adjustments for debt to complement their existing cost basis reporting systems, preserving significant investments in those systems.”
The Emergency Economic Stabilization Act of 2008 mandates that brokerage firms and custodians provide increased reporting and transparency to investors for gains and losses. Phases 1 and 2, cost basis reporting on equities and mutual funds, have already been implemented. Phase 3 debt reporting requirements, which are generally effective January 1, 2014, are widely recognized as the most challenging of the three phases. More complex debt is subject to reporting beginning Jan 1, 2016.
There are many other difficult compliance challenges ahead for brokers as a result of Phase 3 Regulations beyond the tax calculations for original issue discount, bond premium and market discount for debt. In order for brokers to determine the new amounts that must be reported on Form 1099-N or other Forms 1099 for debt, for example, they will have to determine if certain required tax information is available in their security masters. They will need to determine correct tax adjustments for wash sales, corporate actions and whether payments on debt will require updating of such tax calculations in order to obtain the correct amounts.
“The final Phase 3 regulations are not the end of the story in cost basis reporting compliance for debt and options, and brokers may be shocked at the complexities and sizeable challenges in properly adjusting reported cost basis for wash sales and corporate actions that affect debt,” notes Stevie D. Conlon, senior director and tax counsel, Wolters Kluwer Financial Services. “GainsKeeper CompleteDebt provides both accurate tax calculations for debt, as well as all the key tax-specific security master data and the wash sale, corporate action and lot related data and relief methods necessary to compute the actual proper reported amounts for tax reporting.”
Wolters Kluwer Financial Services’ GainsKeeper Brokerage was recently awarded the FTF News Technology Innovation Award for Best Compliance Solution for Operations. The annual awards process recognizes important contributions of technologies that are making important contributions to the financial services post-trade operations space and shaping the future of back- and middle-office.