Basis reporting rules for debt instruments and options postponed for one year

BY SALLY P. SCHREIBER

In Notice 2012-34, the IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014. The postponement was in response to the many comments the IRS received on the Jan. 1, 2013, effective date proposed in REG-102988-11. Brokers and others said they needed more time to implement the new rules. Thus, when the IRS issues final regulations, the reporting rules for debt instruments and options will not apply to those acquired before Jan. 1, 2014.

Sec. 6045(g) requires a broker, when reporting the sale of a debt instrument, to report the adjusted basis of the debt instrument and the character of any gain or loss realized. Sec. 6045(h) requires brokers to report information similar to that required under Sec. 6045(g), as well as information about gross proceeds.   

Sec. 6045A requires brokers to report basis information to other brokers when specified securities are transferred from one broker to another. Sec. 6045B requires reporting of any organizational action (e.g., a recapitalization) that could affect the basis of a specified security, as defined in Sec. 6045.

In comment letters, brokers and others complained to the IRS that implementing these reporting obligations will require them to build and test new systems and that the original Jan. 1, 2013, effective date did not give them enough time to do this. Many commentators requested a delay of at least 18 months and/or until Jan 1, 2015, for debt instruments and until Jan. 1, 2014, for options.

Sally P. Schreiber ( sschreiber@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Time to prepare for overtime changes

As an employer, trusted business adviser, or HR professional, you will need to be aware of exemption guidance, record requirements, advice for clients, and typical problems in applying overtime pay.

QUIZ

News quiz: Good news on pay and benefits for accountants

CPAs can find much to like in recent reports, including news that their expertise and skills are in such demand that pay is expected to rise and that their employers value professional certifications.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.