Simplifying Compliance for Equity Issuers
Netbasis provides equity issuers subject to new cost basis reporting legislation with an efficient, cost-effective compliance solution – one that eliminates the need for expensive and time-consuming system development or upgrades.
Generally, the new legislation affects issuers that:
- Act as their own transfer agent
- Administer their own DRiP, ESOP or other similar plan
- Report gross proceeds of a security sale to a shareholder
- Currently issue Form 1099-B
To help these issuers comply, Netbasis captures and tracks shares acquired under virtually any circumstance, including dividend reinvestment, voluntary cash purchases, and corporate action events such as dividends, splits, and spin-offs. However shares are acquired, Netbasis keeps each share lot separate and distinct, along with acquisition details. When a shareholder sells shares, Netbasis uses this information to calculate adjusted cost basis.
Meet Recordkeeping Challenges
Netbasis addresses the full range of recordkeeping challenges that regulatory compliance presents to issuers. Key functionality includes:
- Support for FIFO, specific lot and average cost (for DRiP shares) lot relief methods
- Characterization of realized gains/losses as short-term/long-term
- Tracking of all corporate actions affecting a security
- Compliance with all applicable IRS rules on wash sales, short sales, gift shares and date of death valuation
- The ability to provide cost basis-related information to counterparties within 15 days of a shareholder account transfer
Enhanced Shareholder Service
Issuers wishing to offer the highest level of service to their shareholders can use Netbasis to:
- Provide current cost basis information for all shares in a shareholder’s account, including those acquired before the legislation’s effective date
- Put powerful portfolio management capabilities into the hands of shareholders, including a tax optimization tool for running “what if” and tax lot relief scenarios around the various lot accounting methods (e.g., LIFO, FIFO, specific lot)
Offering a variety of implementation options, Netbasis can provide high-volume batch processing for one-time, periodic or ongoing cost basis reconstruction/verification and feeding of tax systems or Form 1099 preparation applications. Netbasis can also host data, serve as a desktop resource for shareholder services representatives, or be offered directly to shareholders via the Internet. Contact a Netbasis sales professional to discuss the implementation options available to equity issuers.