Cost Basis for Individual Investors

Simplifying Cost Basis for Individual Investors

What is Cost Basis?

When you sell securities, for income tax purposes you must report the short and long term gain (or loss) on the Schedule D form. To determine the gain (or loss) you must first calculate the cost basis of the security and adjust the cost basis for corporate actions such as splits, mergers and spin-offs. Calculating the adjusted cost basis of a security can be complicated, confusing and time-consuming, particularly if the security has a complex history or has been held for a long time. Typically, investors rely on years’ worth of brokerage statements and a calculator to figure out the cost basis of their securities. Often, the end result is an inaccurate figure. However, “almost” or “approximately” is no longer good enough for cost basis. New regulations that came into effect on January 1, 2011 mean increased fines for under reporting capital gains. You as the investor are ultimately responsible to the IRS for ensuring that capital gain and loss amounts are correct, and as a result it is very important that your cost basis calculations are exact.

Netbasis to the Rescue

A powerful web-based application, Netbasis is more than just a “cost basis calculator” – it’s the premium cost basis solution. It determines the cost basis of your security, no matter how complicated its history, in less time than it takes you to send an email. Netbasis’ database of securities information goes back to 1925, and automatically accounts for all splits, mergers and spin-offs. Simply enter basic details into Netbasis’ easy-to-use web pages, and Netbasis produces all the information required to complete your Schedule D & 8949 form.

The Cost Basis Solution for Gifted and Inherited Securities

Netbasis is an ideal tool for people who have received securities as a gift or an inheritance and are thinking about selling the security. Netbasis can provide you with the value of the securities, the original owner’s cost basis, and your expected gain or loss.

Tax Optimization Feature

Now that investors can inform their brokers as to which sales method to use, the question is: Which tax lots should you sell? Netbasis can help you with tools such as its Tax Optimization feature, which lets you try out sales scenarios using various tax lots and sales calculation methods and see the resulting gains and losses.

How Do I Purchase Netbasis?

Accessing Netbasis is as simple as clicking on the Create Account button or contacting a Netbasis sales professional. Choose from the following options: Individual Transactions: Access to the web-based Netbasis can be purchased on a transaction-by-transaction basis. This is an ideal solution for the individual investor that needs adjusted cost basis, corporate action history and other relevant information for a specific security. Transactions may be purchased via credit card, either individually or in discounted, multiple-transaction packages. Individual or Departmental License: Access to the web-based Netbasis application is also available through both individual and departmental license. An individual or departmental license is a cost-effective solution for financial professionals and government agencies that frequently make cost basis calculations, require historical corporate action information, and need access to historical security pricing and date of death and gift valuation. Licenses may be purchased for one or two years, and provide an individual user or department with unlimited desktop access to Netbasis, either through an intranet or the Internet.

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