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[19844]
March 15, 2006
TO: TAX MEMBERS No. 9-06
FEDERAL LEGISLATION MEMBERS No. 3-06
OPERATIONS MEMBERS No. 8-06
SMALL FUNDS MEMBERS No. 22-06
BROKER/DEALER ADVISORY COMMITTEE No. 12-06
BANK, TRUST AND RECORDKEEPING ADVISORY COMMITTEE No. 11-06
TRANSFER AGENT ADVISORY COMMITTEE No. 20-06
RE: LEGISLATION INTRODUCED TO REQUIRE BASIS REPORTING BY BROKERS
AND MUTUAL FUNDS
Senator Evan Bayh (D-IN) has introduced S. 2414 (attached), a bill to require cost basis
reporting to shareholders selling securities (including mutual fund shares) in taxable accounts and to
the Internal Revenue Service (the “IRS”). This bill, which is cosponsored by Senators Barack Obama
(D-IL), Tom Carper (D-DE), and John Kerry (D-MA), is called the “Simplification Through
Additional Reporting Tax (START) Act of 2006.”
S. 2414 would apply to the following securities acquired after December 31, 2007:
• Shares of stock in a corporation;
• Notes, bonds, debentures, or other evidence of indebtedness;
• Interests in a regulated investment company; or
• Other financial instruments designated in regulations by the IRS.
The bill would not apply to interests in a trust or partnership.
S. 2414 allows for alternative reporting when information sufficient to meet the basis reporting
requirements is not available. The bill also calls for exchanges of information between brokers to
facilitate compliance with the basis reporting requirements.
2
Karen Lau
Assistant Counsel
Attachment (in .pdf format)
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for memo 19844.