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IRS Publishes Interim Guidance on Stock Basis Reporting - Emil Estafanous, CPA : Emil Estafanous, CPA

IRS Publishes Interim Guidance on Stock Basis Reporting

On Jun 22, a IRS released halt superintendence on issues relating to a basement of batch theme to attorney stating (Notice 2011-56). The superintendence responds to stakeholder comments perceived in response to final regulations on a theme released final year (T.D. 9504). The IRS says it skeleton to emanate due regulations on a subject. (For prior coverage, see “IRS Issues Final Regulations on Stock Basis Reporting Requirements.”) The superintendence relates to a normal basement process used to establish a basement of batch in a regulated investment association (RIC) or a division reinvestment devise (DRP), a DRP 10% reinvestment requirement, and last basement of batch on an account-by-account basis.

Under a notice, when a taxpayer changes from a broker’s default normal basement process for RIC or DRP batch to a cost basement method, a basement of a batch reverts to a cost basement if a taxpayer requests a change by a progressing of (1) one year after receiving notice of a broker’s default method, or (2) a date of a initial sale, send or other showing of a stock. A attorney might extend a one-year period, though not after than a date of a initial sale, send or showing of a stock.

To validate as a DRP, a plan’s created papers contingency need that during slightest 10% of each division on any share of batch is reinvested in matching batch (Regs. Sec. 1.1012-1(e)(6)(i)). The notice specifies that a DRP does not destroy a 10% reinvestment requirement if it pays money in lieu of fractional shares when a volume of a division is deficient for some shareholders to acquire stock.

The basement of bonds sole after Jan 1, 2011, is dynamic on an account-by-account basis, though Regs. Sec. 1.1012-1(e) provides account-by-account manners usually for averaged costs. The notice clarifies that lot preference methods, such as FIFO and specific identification, also request on an account-by-account basis.

Taxpayers might rest on a halt superintendence in a notice until superseding superintendence is issued.

The IRS is requesting comments on a superintendence in a notice. Comments should be sent on or before Aug 8, to Notice.Comments@irscounsel.treas.gov, with “Notice 2011-56” in a theme line.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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