IRS delays effective date for broker reporting rules related to debt instruments and options

May 2012


The Emergency Economic Stabilization Act of 2008 (the "Act") imposed new broker reporting requirements under which a broker that is required to report the gross proceeds from the sale or other disposition of a "covered security" is also required to report the adjusted cost basis of the security and whether the character of the gain or loss is short or long-term. The definition of a covered security includes certain debt instruments and options acquired after January 1, 2013. On November 25, 2011, the Department of Treasury and the Internal Revenue Service issued proposed regulations with a proposed effective date of January 1, 2013 titled "Basis Reporting by Securities Brokers and Basis Determination for Debt Instruments and Options" which describe the basis reporting requirements related to debt instruments and options. On May 2, 2012, the IRS announced in Notice 2012-34 that it will delay the proposed effective date for the new basis reporting rules for debt instruments and options from January 1, 2013 to January 1, 2014.       

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