Cost Basis between 1099-B and Bivio Taxes
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Cost Basis between 1099-B and Bivio Taxes I have a few questions related to cost basis. The first is in reference to the section of the 1099-B form that reports Short-term transactions for which basis IS NOT REPORTED to the IRS. The cost basis on the Fidelity form is not the same as that in Bivio. In fact, the basis on the 1099-B is 0 for all of these. In the attachment, on the top, you will see the Bivio reports section I am referencing. The second question relates to the section where Long-Term transactions for which basis IS NOT REPORTED to the IRS. Again, the cost basis for the Frontier Communications is different than that on the Fidelity form. Does it matter? Do I need to reconcile this? Fidelity numbers are: 3/24 169.96 3/27 528.57 3/27 807.22 Bivio numbers are on the bottom of the attachment. Also, in both situations, if the basis is not reported to the iRS, then why is there anything reported for a cost basis in BIVIO? What is the purpose of this reporting? Thanks for your help Karen Dear Karen, If you would like to learn more about cost basis reporting, you might want to take a look at a presentation we did on the subject: https://www.bivio.com/clubmm/file/Public/Cost_Basis_Reporting_Presentation_November_2011.pdf You are taxed on your capital gains from your investments. A gain or loss is the difference between your cost basis in the investment and the price it was sold at. Prior to purchases made starting in 2011, brokers did not have to track or report cost basis, so the IRS didn't have anything to compare your calculations to. Now they do. Even in the sections of the 1099 where the broker is not reporting cost basis, you still need to report it correctly because you still need to report your capital gains and losses correctly. Whether or not it is correct depends on whether your bivio records are accurate. If your broker provides information such as they've done for Frontier, that is different from what you see in bivio, it is important to find out why. Frontier is a company whose "dividends" have been reclassified for the past few years as partly a return of capital. This is an adjustment that lowers your cost basis and which needs to be entered in bivio in order for your records to be accurate. If you haven't made the adjustment entries, you need to. If you email us at support@bivio.com, we'll help you work through what you need to do. Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe On Wed, Mar 20, 2013 at 8:49 PM, KAREN RENNAR <kkrennar@yahoo.com> wrote: I have a few questions related to cost basis. The first is Laurie, I have just read through the information on Cost Basis. Is my next step checking with TDA regarding what they have set as a default for a cost basis method for my account. I believe we do have FIFO, but I will check to be sure. Also the fact that they do not show opening dates and costs for the MHI, MSI and MMI that their reports are inaccurate? Is this easily corrected or do I have a big problem? What do I do
next? Thanks again. Liz From: Laurie Frederiksen <laurie@bivio.biz> To: club_cafe@bivio.com Sent: Wednesday, March 20, 2013 9:09 PM Subject: Re: [club_cafe] Cost Basis between 1099-B and Bivio Taxes Dear Karen, If you would like to learn more about cost basis reporting, you might want to take a look at a presentation we did on the subject: https://www.bivio.com/clubmm/file/Public/Cost_Basis_Reporting_Presentation_November_2011.pdf You are taxed on your capital gains from your investments. A gain or loss is the difference between your cost basis in the investment and the price it was sold at. Prior to purchases made starting in 2011, brokers did not have to track or report cost basis, so the IRS didn't have anything to compare your calculations to. Now they do. Even in the sections of the 1099 where the broker is not reporting cost basis, you still need to report it correctly because you still need to report your capital gains and losses correctly. Whether or not it is correct depends on whether your bivio records are accurate. If your broker provides information such as they've done for Frontier, that is different from what you see in bivio, it is important to find out why. Frontier is a company whose "dividends" have been reclassified for the past few years as partly a return of capital. This is an adjustment that lowers your cost basis and which needs to be entered in bivio in order for your records to be accurate. If you haven't made the adjustment entries, you need to. If you email us at support@bivio.com, we'll help you work through what you need to do. Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe On Wed, Mar 20, 2013 at 8:49 PM, KAREN RENNAR <kkrennar@yahoo.com> wrote: I have a few questions related to cost basis. The first is Thank you for contacting Ad Plus and Barry Williams. I will be out of the office Thursday March 21st the entire day. Should you need immediate assistance, please contact Heather Boone at 502.459.9751 x 34 or by email at heather@adplusspec.com.
Thank you for your patience during this time out.
Barry
Barry H. Williams Ad Plus, Inc. 4011 Shepherdsville Road Louisville, KY 40218 502.459.9751 x 33 barry@adplusspec.com I am out of the office Friday 3/22/13 and will return Monday 3/25/13. I will have limited access to e-mail and may not be able to respond immediately. If you need something immediately, contact Melanie Bolton or Darryl Monroe. Otherwise, I will get back to you when I return. Curtis Please refer to Martin Companies Security statement at: https://share.romlc.net/iss.aspx The important thing is that your club transactions are entered correctly in bivio. If they are, bivio will calculate and report gains and losses correctly on your taxes. If your broker is missing information on their reports, it is because they had no obligation to track cost basis for purchases prior to 2011. That doesn't mean you shouldn't have been doing it. When you own any capital asset, it is your responsibility to keep accurate records substantiating its cost basis. That is what the bivio program is for. But it does require your diligence to make sure the entries that you have made are correct. How do you know if they are entered correctly in bivio? Here are some places you can begin your checks: 1. Brokerage information - if you have purchased all your shares from the same broker, they may have your historical purchase information in a report that you can compare your bivio numbers to. Check for a Realized Gain/Loss report that shows each lot. Compare that with the bivio capital gains report which also shows each lot sold. 2. Statements- Your past monthly statements are the best place to show you the details of each purchase you made and also the details of any reorganization affecting the security. You can compare this with the transaction list for the security in bivio by going to Accounting>Investments and clicking on the name of the investment. 3. Company Websites- In the investor relations sections of many company websites, there are now cost basis calculators you can use to determine the cost basis of shares if you enter the date you made the original purchase. 4. Yahoo Finance Historical prices- There is a column on this page which shows adjusted closing cost which can give you at least a ballpark idea of the current adjusted basis for shares you purchased on a particular date. None of these sources is infallible. Cost basis is affected by many things including original purchase price, historical lot selection for sales, reorganizations and wash sales. If you have dividend reinvestments going back many years, and you have not been on top of making sure your bivio records are accurate each month or even each year, you have hours of work to do to go through all your entries and make sure your records are correct. While we'd like to be able to just waive a magic wand in support and assure you they are, unfortunately we can't do that. We do the best we can to help clubs work through entries to make sure everything has been recorded correctly in bivio and that cost basis is being calculated correctly in bivio. However, in the midst of a busy tax season, if your records haven't been reconciled for a long time, we just don't have time to stop everything and work through hundreds of your entries quickly to help you make sure they are accurate. If you have real concerns your club records are inaccurate and you don't know how to correct them, we'd recommend you get some outside tax help to help you make sure they are resolved correctly. Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe On Thu, Mar 21, 2013 at 11:17 PM, Liz Schambach <lscham8531@yahoo.com> wrote:
Laurie, I want to get this all straight in my head so I don't face another tax season like this. TDA has gaps in their records. For example they do not have an opening date for several of the stocks we own. I have been in touch with them and they have instructed me on how I can update cost basis information. Some of them were bought in different lots. I have records going back about nine years, and I am willing to work on that project.
However, we have been together since 1997 I do not have all those records. What happens in that case? Thanks again for all your help. Also my question is each month when I receive my statements am I supposed to reconcile cost basis from TDA and Bivio for each stock ?
Truthfully, the only things I have checked on my statements were the number of shares and the cash balance and costs of purchases. From: Laurie Frederiksen <laurie@bivio.biz> To: club_cafe@bivio.com Sent: Friday, March 22, 2013 9:41 AM Subject: Re: [club_cafe] Cost Basis between 1099-B and Bivio Taxes The important thing is that your club transactions are entered correctly in bivio. If they are, bivio will calculate and report gains and losses correctly on your taxes. If your broker is missing information on their reports, it is because they had no obligation to track cost basis for purchases prior to 2011. That doesn't mean you shouldn't have been doing it. When you own any capital asset, it is your responsibility to keep accurate records substantiating its cost basis. That is what the bivio program is for. But it does require your diligence to make sure the entries that you have made are correct. How do you know if they are entered correctly in bivio? Here are some places you can begin your checks: 1. Brokerage information - if you have purchased all your shares from the same broker, they may have your historical purchase information in a report that you can compare your bivio numbers to. Check for a Realized Gain/Loss report that shows each lot. Compare that with the bivio capital gains report which also shows each lot sold. 2. Statements- Your past monthly statements are the best place to show you the details of each purchase you made and also the details of any reorganization affecting the security. You can compare this with the transaction list for the security in bivio by going to Accounting>Investments and clicking on the name of the investment. 3. Company Websites- In the investor relations sections of many company websites, there are now cost basis calculators you can use to determine the cost basis of shares if you enter the date you made the original purchase. 4. Yahoo Finance Historical prices- There is a column on this page which shows adjusted closing cost which can give you at least a ballpark idea of the current adjusted basis for shares you purchased on a particular date. None of these sources is infallible. Cost basis is affected by many things including original purchase price, historical lot selection for sales, reorganizations and wash sales. If you have dividend reinvestments going back many years, and you have not been on top of making sure your bivio records are accurate each month or even each year, you have hours of work to do to go through all your entries and make sure your records are correct. While we'd like to be able to just waive a magic wand in support and assure you they are, unfortunately we can't do that. We do the best we can to help clubs work through entries to make sure everything has been recorded correctly in bivio and that cost basis is being calculated correctly in bivio. However, in the midst of a busy tax season, if your records haven't been reconciled for a long time, we just don't have time to stop everything and work through hundreds of your entries quickly to help you make sure they are accurate. If you have real concerns your club records are inaccurate and you don't know how to correct them, we'd recommend you get some outside tax help to help you make sure they are resolved correctly. Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe On Thu, Mar 21, 2013 at 11:17 PM, Liz Schambach <lscham8531@yahoo.com> wrote:
Dear Liz, If you do not have all the records you need to accurately produce tax forms, you will need to consult with a tax advisor to determine how you'd like to proceed. Once you decide on a course of action, we can let you know how to make adjustments in bivio to reflect what you've decided to do. I would highly recommend to you and everyone else that going forward, when you sell stock during the year, that at the time of the sale, you compare the gain/loss information calculated by bivio on the capital gain/loss report with the realized gain/loss report you will be able to get from your broker. If you catch discrepancies during the year when they arise and you need help figuring them out, we can help you work through them and get either your bivio or brokerage information corrected in whatever way might be necessary so you won't have any issues to handle that might cause a delay at tax time. Laurie Frederiksen www.bivio.com On Sat, Mar 23, 2013 at 6:08 PM, Liz Schambach wrote:
Thanks, Laurie. Liz From: Laurie Frederiksen <laurie@bivio.biz> To: club_cafe@bivio.com Sent: Sunday, March 24, 2013 10:35 PM Subject: Re: [club_cafe] Cost Basis between 1099-B and Bivio Taxes Dear Liz, If you do not have all the records you need to accurately produce tax forms, you will need to consult with a tax advisor to determine how you'd like to proceed. Once you decide on a course of action, we can let you know how to make adjustments in bivio to reflect what you've decided to do. I would highly recommend to you and everyone else that going forward, when you sell stock during the year, that at the time of the sale, you compare the gain/loss information calculated by bivio on the capital gain/loss report with the realized gain/loss report you will be able to get from your broker. If you catch discrepancies during the year when they arise and you need help figuring them out, we can help you work through them and get either your bivio or brokerage information corrected in whatever way might be necessary so you won't have any issues to handle that might cause a delay at tax time. Laurie Frederiksen www.bivio.com On Sat, Mar 23, 2013 at 6:08 PM, Liz Schambach wrote:
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