Cost-basis reporting on securities was supposed to make it easier for tax preparers to make the capital gains calculations required by recent tax law changes. However, the challenges of mandatory cost-basis reporting have caused problems for tax professionals even as the Internal Revenue Service goes full-steam ahead with requiring reporting on more complex securities. This article discusses the rationale for the reporting requirement and addresses the issues preparers face. The author offers five suggestions for navigating the challenges of cost-basis reporting.
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