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Final Regulations on Cost Basis Rules for Options and Debt Instruments


On April 17, 2013 the U.S. Treasury Department and Internal Revenue Service (IRS) issued final regulations for the third phase of cost basis reporting impacting debt and options (the “Final Regulations”). The Final Regulations update and clarify reporting requirements for debt and options outlined in proposed regulations issued November 25, 2011. This paper will highlight the following:

  • How the scope of the Final Regulations for options generally stays the same as the proposed regulations, with slight differences
  • How the Final Regulations provide some temporary relief from the most complex aspects of costs basis reporting for debt
  • The most significant development in the Final Regulations – the requirement that brokers allow customers to make and revoke five specific elections
  • Relief provided for transfer statement reporting
  • Any additional developments

Download this paper for insights around the challenges in addressing Phase III cost basis reporting requirements, including the impact of the Final Regulations.

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