Securities Brokers Get Another Reporting Compliance Break

Securities Brokers Get Another Reporting Compliance Break

IRC Section 6045 provides the broker reporting rules for certain securities, including debt instruments and options. Generally, for debt instruments acquired on or after January 1, 2013, brokers are required, when reporting the sale of the debt instrument to the IRS, to report the customer's adjusted basis for the debt instrument and whether any gain or loss upon the sale of the debt instrument is long-term or short-term. In addition, under IRC Section 6045A, brokers transferring securities subject to basis reporting must report basis and other information to the receiving broker. Also, IRC Section 6045B requires an issuer of a security subject to basis reporting to file a return to describe the issuer's actions that affect the basis of the security.

Under November 2011 proposed treasury regulations related to
IRC Sections 6045, 6045A, and 6045B for debt instruments and options, brokers must report information required under:

  • IRC Section 6045(g) for certain debt instruments acquired on or after January 1, 2013;
  • IRC Section 6045(h) for certain options granted or acquired on or after January 1, 2013;
  • IRC Section 6045A for a transfer of certain debt instruments or options that occurs on or after January 1, 2013; and
  • IRC Section 6045B for an organizational action occurring on or after January 1, 2013, that affects a debt instrument or an option. 76 FR 72652.

After receiving numerous comments indicating that the January 1, 2013 deadline did not provide the time needed to meet the filing requirements, IRS Notice 2012-34 gave securities brokers a one-year extension (until January 1, 2014) for reporting basis information for debt instruments and options.

On April 17, 2013, final regulations extended to securities brokers yet another reporting compliance break. The final regulations implement the reporting rules in phases: Basis reporting for less complex debt instruments still begins January 1, 2014. However, reporting for more complex debt instruments, including those without fixed yield and maturity dates, does not begin until January 1, 2016.  78 FR 23116

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