Important Goal with Cost Basis Reporting—Avoid Surprises!

Among the more frustrating aspects of cost basis reporting are the potential surprises. For example, you intended to sell a specific lot, but the account’s default accounting method was used instead. Or you are selling securities that were recently transferred, but the original cost basis was not provided by the delivering custodian. In order to help avoid these frustrating surprises, re-evaluate your post-trade process to better catch any lot selection changes prior to settlement. In addition, remember that cost basis information often follows the initial transfer of securities, and it is generally not part of the first transfer record.