COST BASIS PLUS USER GUIDE

Transcription

1 COST BASIS PLUS USER GUIDE 2014 Thomson Reuters/Tax & Accounting. All Rights Reserved.

2 PROPRIETARY MATERIALS No use of these proprietary materials is permitted without the express written consent of or license from Thomson Reuters. Altering, copying, distributing or reproducing any of these proprietary materials in any manner is expressly prohibited. DISCLAIMERS The scenarios, examples, and content within this course are used strictly for instructional purposes only. Thomson Reuters shall not be responsible for any liability directly or indirectly resulting from any outcomes or conclusions drawn from individual research discussed during the class. In response to IRS Circular 230 requirements, Thomson Reuters advises that any discussions of federal tax issues in its publications and products or in third-party publications and products on its platforms are not intended to be used and may not be used to avoid any penalties under the Internal Revenue Code, or to promote, market, or recommend any transaction or subject addressed therein. SOFTWARE LICENSE AGREEMENT The right to use the software product described in this workbook is specifically conditioned upon your execution of and compliance with a Tax Software and Services Agreement with Thomson Reuters. All contents are copyright 2013, Thomson Reuters. All rights reserved. 2

3 TABLE OF CONTENTS INTRODUCTION... 5 COVERAGE... 5 CORPORATE EVENT TYPES... 6 METHODOLOGY FOR PROVIDING COST BASIS ALLOCATIONS AND FAIR MARKET VALUES... 6 LOGON... 8 LOG IN TO COST BASIS PLUS... 8 MAIN MENU... 9 COST BASIS SEARCH (BASIC)... 9 COST BASIS SEARCH (ADVANCED) SEARCH DIVIDENDS CORPORATE FAMILY TREE COST BASIS CALCULATOR PRICE LOOKUP IMPORTANT NOTES ABOUT THE COST BASIS CALCULATOR SCHEDULE B INCOME SUMMARY SCHEDULE D REALIZED GAIN/LOSS SUMMARY DETAIL TRANSACTION LEDGER COST BASIS PLUS - PREMIUM CORPORATE ACTIONS GLOSSARY FAQs...30 GENERAL CALCULATOR TECHNICAL SUPPORT

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5 INTRODUCTION Cost Basis Plus is a Checkpoint tool from Interactive Data Corporation, a third-party provider. You can use this tool to research securities information for completing 1040 Schedules B and D. With this Web-based, always current, automated securities payment research tool, you can access the following: Cash dividends (Interactive Data dividends going back to 1971) Mutual fund dividends (back to 1971) Cost basis with automated calculations (back to 1900 and earlier) In its unique status as the only Web-based cost basis lookup service available, Cost Basis Plus can do in seconds what might otherwise take days. Simply by supplying the name of the security, price paid, amount purchased, date of purchase and date of sale, this service can automatically calculate the adjusted cost basis, taking into account all splits, spin-offs, distributions and other cost basis-affecting corporate actions. You can track Dividend Reinvestment Programs (DRIPs). Most mutual funds and more than 1400 stocks offer DRIPs. The cost basis information on the reinvested dividends (amount of dividend, shares purchased, cost per lot, cumulative totals, average cost per reinvested dividend and average overall cost) are provided for that portion of a cost basis calculation going forward from 1971 (the beginning of the dividend information). Note: This service is updated nightly; therefore, the data you get is always current as of the previous business day. COVERAGE U.S. Tax Information for U.S./Canadian Equities The Cost Basis Service provides U.S. tax information, along with the relevant cost basis allocation factors and market values for U.S./Canadian equities. American Depositary Receipts (ADRs) and Foreign Securities The Cost Basis Service provides U.S. tax information, along with the relevant cost basis allocation factors and market values for ADRs traded on U.S. exchanges. Fixed Income Securities Coverage includes all announcement types. You will find that the following announcement types are most often affected by fixed income corporate actions: Recapitalization Exchange (Mandatory) Conversion (Mandatory) Mutual Funds Coverage of mutual funds is generally limited to cash distributions and merger announcements. 5

6 CORPORATE EVENT TYPES The following corporate actions are covered in the Cost Basis Service: Conversions Distribution Exchanges Information Merger Merger Election Name Change Recapitalization Reverse Stock Split Spin-off Stock Dividend Stock Split (For additional information, please refer to the Corporate Actions Glossary at the end of this guide.) METHODOLOGY FOR PROVIDING COST BASIS ALLOCATIONS AND FAIR MARKET VALUES General: Spin-Offs and Stock Distributions Cost Basis Plus provides a cost basis allocation for nontaxable spin-offs and stock distributions either the day after the payable date or the day after the ex-date, depending on each specific issue. This allocation will either be estimated using the average price of the high and the low from the payable or ex-date or the allocation factor provided by the issuer. An allocation factor will not be estimated when an issuer s allocation factor is received on the payable date or the exdate. However, since most companies require time to release these factors, Interactive Data offers an estimated factor until the issuer can release its "official" calculation. Interactive Data closely monitors a company s likely method of calculation. If the issuer has indicated that it will be using a certain method of calculation, Interactive Data will most likely use this method when calculating an estimated allocation. For spin-offs, a note indicates whether the allocation was provided by the issuer or has been estimated as described above. Taxable spin-offs and stock distributions are updated with the relevant market value for the resulting security after the first day of trading for that security normally, the payable date or the ex-date. This information is estimated by Interactive Data, which uses the mean of the high and low traded price from either the payable date or the ex-date, depending on the corporate action. The issuer s determination of the market value will always override the Interactive Data estimated market value. 6

7 Fair Market Value: The fair market value methodology used to calculate the estimated cost allocation in a spin-off or distribution is the mean of the high and low traded price from either the pay date or the ex-date, depending on the corporate action. (Interactive Data normally does not use "when-issue" traded prices to calculate estimated cost allocation, except when there are specific instances that warrant their use, e.g., when described in a legal opinion relating to the corporate action). Company s Cost Basis Allocation: Interactive Data monitors cost allocations from issuers and releases those percentages, as available. An issuer s cost basis allocation will update and replace an Interactive Data estimated allocation. The Cost Basis Calculation Method for Nontaxable Spin-offs and Distributions: Below is an example of the calculation of the cost basis allocation for a spin-off or distribution, if the issuer has yet to provide a cost basis allocation by the day after the ex-date. Example: Company A spins off Company B. For every 1 Company A share held, holders will receive 0.5 shares of Company B. (1 Company B share for every 2 Company A shares held). The average of the high and low prices for Company A s shares on the payable date or ex-date was $10.00 (high of $11.00; low of $9.00). The average of the high and low prices for Company B s shares on the payable date or ex-date was $5.00 (high of $6.00; low of $4.00). Multiply the Company A shares by the 1 exchange rate ($10.00 times 1 = $10.00). Multiply the Company B shares by the 0.5 exchange rate ($5.00 times 0.5 = $2.50). Add the value of the two shares together ($10 + $2.50 = $12.50). Divide Company A s adjusted market value ($10.00) by that total ($12.50) =.80 (This is the cost basis allocation for the A shares.) Divide Company B s adjusted market value ($2.50) by that total ($12.50) =.20 (This is the cost basis allocation for the B shares.) COST BASIS ALLOCATION: Company A = 0.80 Company B = 0.20 Mergers, Merger Elections, Exchanges, Conversions and Recapitalizations Taxable mergers, merger elections, exchanges, conversions and recapitalizations will be updated with estimated or actual market values for the resulting securities from the effective date. Interactive Data will estimate this information by using the mean of the high and low traded price from the effective date. The company s determination of market value will update and replace Interactive Data s estimated market values. Nontaxable spin-offs and stock distributions in which the holder is receiving more than one security will follow the same method described above. 7

8 LOGON LOG IN TO COST BASIS PLUS Cost Basis Plus subscribers can access this product in Checkpoint by performing the following steps: 1. Select Cost Basis Plus from the Tools tab. 2. Click Continue to access Cost Basis Plus. 8

9 MAIN MENU The Main Menu, which is the main gateway to Cost Basis Plus, has three sections: Search Cost Basis Database: Search the entire Cost Basis Plus database for corporate actions with tax consequences by user-defined variables. Search Dividends: Search the entire Cost Basis Plus database for equity and mutual fund dividends by user-defined variables. Cost Basis Calculator: Compute the resulting cost basis and number of shares of a security. COST BASIS SEARCH (BASIC) Using the Cost Basis Search function, you can search the entire Cost Basis Plus database. You can perform searches by CUSIP, ticker symbol, or company description (issuer name). By clicking on the link, you can also search for a CUSIP by issuer name. Note: Interactive Data recommends clients search by CUSIP number because ticker symbols are subject to more frequent changes. The Corporate Family Tree function allows you to search the entire database for related securities to help identify the originally purchased security. You can obtain a list of related securities based on spin-offs, acquisitions, distributions and other corporate actions. Note: This function, which does not use the calculator, displays the event and includes a brief description in reverse chronological order. 9

10 To research a listing of capital changes, perform the following steps: 1. Click Search Cost Basis Database on the Main Menu. The Cost Basis Search screen opens: 2. To identify a security, type a CUSIP or ticker symbol in the CUSIP or Ticker field. Note: You can do a CUSIP search either by clicking the magnifying glass icon or by clicking the link: 10

11 3. Either type the Issuer Name and click Look Up, or point to the first letter of the issuer name and scroll until you find it. In this example the CUSIP for Home Depot is In this example, select the CUSIP to see the results for Home Depot Inc.: COM = Common stock 11

12 5. Click a 9-digit CUSIP number , the COM in this example, and it will display automatically on the Cost Basis Search screen: 6. Click Search to display your results: 12

13 7. Click a link in the Description column for more information about the security. For example, if you click the first link above (for 12/30/1999), you will see the following screen: 13

14 COST BASIS SEARCH (ADVANCED) With the Advanced Search function, you can find corporate actions by a particular event, date type or tax status. 1. Click Search Cost Basis Database on the Main Menu. 2. Click Advanced Search. 14

15 The Advanced Cost Basis Search screen opens: With Advanced Search, you can find cost basis information such as Conversion, Distribution, Merger, etc. from the Notice Type drop-down menu. And from the Tax Status drop-down menu, you can select from a list that includes Capital Gain, Dividend Income, and Return of Capital. You can specify by Date Type any corporate actions that might affect cost basis. You can also use the convenient Calendar icon (insert calendar icon) to select dates. 3. Enter CUSIP or Ticker. 4. Make a selection from the Notice Type drop-down menu or from the Tax Status drop-down menu (or from both). 5. Click Search. 15

16 Results will retrieve only the requested data relating to the search criteria: The Advanced Cost Basis Search also provides the option on the right to search Data Type by date: 16

17 Results will retrieve the requested data relating to the search criteria: 6. Click the hyperlink in the Description column to view details about the event. 17

18 SEARCH DIVIDENDS To look up specific cash dividends, perform the following steps: 1. Click Search Dividends on the Main Menu to access the Income Search screen: 2. To identify a security, type a CUSIP or ticker symbol in the CUSIP or Ticker field. (In this example, HD represents Home Depot, Inc.) Note: CUSIP stands for Committee on Uniform Securities Identification Procedures, which is the committee that assigns identification numbers to securities. If you do not know the CUSIP or ticker symbol, you can search by company name. 3. Type a date or select a date for the Select tax period start date field. 4. Type a date or select a date for the Select tax period end date field. (The default is today s date. ) 18

19 5. Click Submit to see your search results: Note: You can print this page. CORPORATE FAMILY TREE Use the Corporate Family Tree function to search for related securities and to identify an originally purchased security based on corporate actions. When you select the CUSIP associated with the originally purchased security, it will be entered into the calculator automatically. Follow the steps below to use the Corporate Family Tree: 1. Enter the CUSIP or Ticker symbol of the security that was sold or that you currently hold. Note: Ticker symbols can change and are not as reliable for backward reference as a CUSIP number. 19

20 2. Click Search Family Tree. The Family Tree Search results screen opens: 3. Select the CUSIP that identifies the originally purchased security. Then that CUSIP will be entered into the Cost Basis Search CUSIP or Ticker field automatically: 20

21 COST BASIS CALCULATOR The Cost Basis Calculator automatically calculates the cost basis and number of shares held for requested securities. The Cost Basis Calculator covers complex factors such as mergers, spin-offs, voluntary events, and dividend reinvestments. To use the Cost Basis Calculator, simply input the security identifier, purchase date, purchase price, and number of shares purchased. If you need assistance, such as looking up the price of a security, or looking up a CUSIP, help is integrated into the calculator next to the entry fields. Note: Use the Corporate Family Tree function first if you are not sure of the CUSIP or Ticker for a security. 21

22 Enter the following information: CUSIP Date Shares Purchased Price Paid Per Share Number of Shares Purchased Shares Sell Date Reinvest Dividends Enter a security identifier or search the CUSIP database using the company name by clicking the magnifying glass icon. [Or use the Corporate Family Tree function (refer to instructions later in this section)]. Enter Purchase Date or use the Calendar icon to look one up. Enter share acquisition or purchase price or get daily historical pricing information by using the Price Lookup link. Enter the number of shares purchased. Enter the date the securities were sold or disposed (default is current day). Reinvest Dividends: Select Yes or No if you want the Calculator to include reinvested dividends or Exclude Dividends if you want to exclude all dividend information from the results. Click Calculate to view results. 22

23 PRICE LOOKUP You can look up prices going back to 1968 by simply clicking the magnifying glass icon next to the Price Paid Per Share field. IMPORTANT NOTES ABOUT THE COST BASIS CALCULATOR The calculator includes information on stock dividends and mutual fund distributions back to Please be aware that DRIP information for many stocks and mutual funds uses an approximate reinvestment rate equal to the closing price on the ex-dividend date, and may not match paying agent data. Historical pricing data is available back to Information provided in the results includes details organized in sections to show original position, resulting positions, a detailed transaction ledger, and a Schedule B income summary (if dividend information is not excluded in Step 7). If there are any mandatory cash-out events 23

24 during the time period, a Schedule D capital gain/loss summary will be included. The results of any cost basis lookup can be printed or saved to a spreadsheet to facilitate additional work. The Cost Basis Calculator does not take into account basis adjustments that are peculiar to the investor such as basis marked to market as a result of death of the beneficial owner, any increase in basis as a consequence of gift tax paid by the beneficial owner, etc. The Cost Basis Calculator does not take into account whether stock was issued by a Passive Foreign Investment Company (PFIC). The determination of PFIC status is complex, and Interactive Data does not undertake any efforts in this regard. SCHEDULE B INCOME SUMMARY Every Cost Basis Lookup now displays (where results warrant) a complete listing of all dividends that were paid on the security entered as well as all securities that may have resulted from it during the holding period. All dividend/payment information is detailed, subtotaled by security and shows the breakdown of payment information that tax preparers need, as shown in the following example: 24

25 SCHEDULE D REALIZED GAIN/LOSS SUMMARY Every Cost Basis Lookup now displays (where results warrant) a Realized Gain and Loss Summary for securities that had a mandatory cost basis event during the holding period and that resulted in an end-of- the-line for the position or for a security that emanated from the original position. An example would be a cash merger, as shown in the following Columbia Pictures example: DETAIL TRANSACTION LEDGER The Cost Basis Lookup displays every transaction that affected the security, which can link back to details on the specific transaction, as shown in the following example: 25

26 COST BASIS PLUS - PREMIUM Subscribers of the CBP Premium version of the product will receive the added benefit of being able to do multiple transactions in one calculation: 1. On the Cost Basis Multi Trades Calculator screen, enter the research criteria for your first trade: 2. Then click Enter More Trades. The Cost Basis Calculator - Enter More Trades screen opens: You can use the Enter More Trades function to enter multiple tax lots of the same or different securities. Then you can view the gain or loss and adjusted cost basis calculations for multiple tax lots in one detailed report. 26

27 3. Enter the following information for each new tax lot: Action CUSIP Trade Date Cost Shares Reinvest Dividend Accounting Method Choose an action from the drop-down menu: Begin Balance for a starting position that is not a Buy. This could be a free delivery or transfer in or a starting balance. It differs from a Buy transaction in that no amount of cash is subtracted from the principal if the shares are sold. Buy for a security purchase. Sell for the sale of a security. Sell All for the sale of all tax lots that were entered as Buys for a specific security. You must enter the original CUSIP number for the security purchased. Use the Corporate Family Tree function if you do not know the original CUSIP number, or if you only know the ticker symbol. You can also use the CUSIP look-up utility to the right of the CUSIP field. Enter the trade date or select it from the calendar utility. Enter the original price paid for the security. You can also use the look-up utility to the right of the cost field to look up an historical price for the date the security was purchased or sold. Enter the number of shares. Choose N/A, Yes or No from the drop-down menu. Select one of the following accounting methods from the drop-down menu: FIFO (First in First Out) - Shares will be sold from the first tax lot purchased. The calculator defaults to this method if no other method is selected. AVG (Average Cost) - Average cost will sum the adjusted cost basis from all tax lots entered of the same security at the time of sale and divide by the total number of shares. The unit average cost is then applied to each share sold. This method will reduce the number of shares in each tax lot proportionally based on the number of shares sold. LOT (Specific Lots Sale) - Use this method to specify a specific lot to be sold and enter the original purchase date in the Sell Lot field. ACSC (Average Cost Single Category FIFO) - For Mutual Funds Only. This method totals the number of shares and adjusted cost basis from all tax lots at the time of sale and divides the total adjusted cost basis by the total number of shares. The unit average cost is applied to each share being sold. This method will reduce the number of shares on a FIFO basis. 27

28 ACDCS, ACDCL (Average Cost Double Category) - For Mutual Funds Only. This method separates the tax lots being sold into long-term (ACDCL) and short-term (ACDCS) categories. The average cost is then calculated separately for each category as described in ACSC above. This method will reduce the number of shares in each category (ACDCL and ACDCS) on a FIFO basis. Note that if you indicate that a larger number of shares are being sold than are included in one of the categories; the calculator will indicate that there is insufficient inventory. 4. Click Add Trade to add this lot. (You can click Remove Last Trade to remove the last trade added, or click Calculate to generate the cost basis calculations for the transactions you have entered.) 28

29 CORPORATE ACTIONS GLOSSARY Conversion (Mandatory only) Distribution Exchange (Mandatory only) Information Merger Merger Election Name Change Recapitalization Reverse Stock Split Spin-Off Stock Dividend Stock Split One type of security may be converted into or exchanged for another type of security or cash. The target company makes a cash or stock distribution. If stock is being distributed, the CUSIP Number for the distributed security will be reported. An issue of a target company is being exchanged for another type of security. The new security can be from the target company or the initiating company. An exchange can be either mandatory or voluntary. This notification type is used to report a corporate action that does not fit any of the other notification types. A combination of two or more companies. A target company announces its definitive agreement to merge with another company. Within the Merger announcement, there are often updates about the different stages of the action: Offer to Buy, New Offer, Meeting, Approval, Completion and Termination. A target company enters into a definitive agreement to merge with another company. Shareholders have several options to choose in exchange for shares of the target company. Within the Merger Election announcement, there are often updates about the different stages of the action: Offer to Buy, New Offer, Meeting, Approval, Completion and Termination. A company changes its corporate name. A corporation changes its capital structure. A company announces a stock split that reduces the number of shares outstanding. The separation of a subsidiary or division of a company from its parent by issuing shares in a new corporate entity. Shareholders in the parent company will receive securities in the new entity in proportion to their original holding and the total value remains A dividend paid in securities instead of cash. Stock Split - The division of the outstanding shares of a corporation into a larger number of shares. A 2-for-1 split by a company with 1 million shares outstanding results in 2 million shares outstanding. 29

30 FAQs GENERAL Interactive Data's Cost Basis Plus provides daily information on any corporate action that could affect the unit cost factor of a security. Each announcement contains pertinent corporate actions information such as terms of the action and relevant dates, as well as the issue s updated unit cost factor and tax ramifications. Cost Basis Plus is based on the announcements provided by Interactive Data s awardwinning daily Corporate Actions file. The Cost Basis department subsequently researches the tax and cost basis consequences of each action and completes them in a daily file. These announcements then appear on the Web product the following morning. Q: What types of securities does Interactive Data s Cost Basis Plus cover? Answer: U.S. Tax Information for North American Equities Cost Basis Plus provides U.S. tax information, along with the relevant Cost Basis allocation factors and market values for all North American equities. It does not, however, provide tax opinions for holders who reside outside of the United States. American Depositary Receipts (ADRs) and Foreign Securities When available, Cost Basis Plus provides U.S. tax information, along with the relevant Cost Basis allocation factors and market values for all ADRs. Fixed Income Securities Cost Basis Plus provides coverage of fixed income instruments whenever its tax basis or cost basis is affected. Generally, fixed income instruments will not be affected by the announcement types that Cost Basis Plus covers. These instruments generally appear only for the following announcement types: Recapitalization Exchange (Mandatory) Conversion (Mandatory) Mutual Funds Generally, mutual fund corporate actions are not covered by Cost Basis Plus. Cash distributions, however, plus any merger that might directly affect the mutual fund, will be reported. Q: What corporate event types are covered by Cost Basis Plus? Answer: The following corporate event types are covered by Cost Basis Plus: Conversion (Mandatory only) Distribution Exchange (Mandatory only) Information Merger 30

31 Merger Election Name Change Recapitalization Reverse Stock Split Spin-off Stock Dividend Stock Split Q: What is your methodology for providing cost basis allocations and Fair Market Values Answer: Spin-Offs and Stock Distributions General: Interactive Data will release a Cost Basis allocation for nontaxable spin-offs and stock distributions either the day after the payable date or the day after the ex-date, depending on each specific issue. Interactive Data calculates this allocation by using the average price of the high and the low from the payable date or the ex-date. Then they update this factor at a later date with the allocation factor that has been released by the company. There have been instances when Interactive Data has received a company's allocation factor so quickly, that is, on the payable date or ex-date, that it was unnecessary to calculate its own allocation factor. However, most companies require sufficient time to release these factors, which is why Interactive Data offers its own factor until the company releases its "official" calculations. Interactive Data will monitor for a published cost allocation from the company and will release those percentages as soon as they are available. The company s Cost Basis allocation will override Interactive Data s calculated allocation, except in the rare instance that the company has published an inaccurate calculation. Interactive Data also closely monitors a company s likely method of calculation. If, prior to publication, the company has indicated to Interactive Data that it will be using a certain method of calculation, Interactive Data will most likely use this same method when calculating its default allocation, so users can obtain accurate information prior to its publication by their company. On all spin-off announcements, Interactive Data displays a note to its users telling them whether the allocation was received by the company or whether Interactive Data did the calculation based on the standard outlined above. Taxable spin-offs and stock distributions will be updated with the relevant market value for the resulting security after the first day of trading for that security, which is normally the payable date or the ex-date. This information will be calculated by Interactive Data, which will use the mean of the high and low traded price from either payable date or ex-date, depending on the action. The company s determination on the market value will always override Interactive Data s default calculation. Fair Market Value: The fair market value methodology that Interactive Data uses to calculate the cost allocation is the mean of the high and low traded price from either pay date or ex-date, depending on the action. In addition, Interactive Data normally does not use "when-issued" traded prices to calculate its cost allocation percentages. However, there are specific instances that warrant the use of when-issued prices. 31

32 Q: What is your calculation method for Nontaxable Spin-offs and Distributions? Answer: The following is an example of the way in which Interactive Data calculates its Cost Basis allocation for spin-offs and distributions: Interactive Data calculates and releases these allocations if a company has yet to provide its holders with a Cost Basis allocation by the day after the ex-date. It uses the industry standard for calculation, which is demonstrated below. Any Cost Basis allocation that is subsequently released by the company will override and update Interactive Data s allocation. On all Interactive Data Cost Basis announcements that contain an allocation factor or market value (for taxable actions), Interactive Data will indicate the source (Interactive Data or the company) from which the allocation was derived. Note: Interactive Data uses the market values for both securities on either the payable date or the ex-date. More often than not, the values from the ex-date are used, but this will differ with each specific issue. Example: Company A spins off Company B. For every 1 Company A share held, holders will receive 0.5 of Company B shares (1 Company B share for every 2 Company A shares held). The average of the high and low prices for Company A s shares on the payable date or ex-date was $10.00 (high of $11.00; low of $9.00). The average of the high and low prices for Company B s shares on the payable date or ex-date was $5.00 (high of $6.00; low of $4.00). Multiply the Company A shares by the 1 exchange rate ($10.00 x 1 = $10.00). Multiply the Company B shares by the 0.5 exchange rate ($5.00 x 0.5 = $2.50). Add the value of the two shares together ($10 + $2.50 = $12.50). Divide Company A s adjusted market value ($10.00) by that total ($12.50) =.80, which is the allocation for the A shares. Divide Company B s adjusted market value ($2.50) by that total ($12.50) =.20, which is the allocation for the B shares. ALLOCATION: Company A = 0.80 Company B =

33 Q: How do you handle Mergers, Merger Elections, Exchanges, Conversions and Recapitalizations? Answer: Taxable mergers, merger elections, exchanges, conversions and recapitalizations will be updated with the relevant market values for the resulting securities from the effective date. Interactive Data calculates this information by using the mean of the high and low traded price from the effective date. The company s determination on the market value will always override Interactive Data s default calculation. Nontaxable actions in which the holder is receiving more than one security will follow the same method outlined above for nontaxable spin-offs and stock distributions. CALCULATOR Q: What is the general function of the Cost Basis Calculator? Answer: The Calculator is designed to automatically retrieve tax and Cost Basis data in our extensive historical files and adjust the price and number of shares held for a given security. To calculate the Cost Basis, the system requires only the following data elements: Security Identification (CUSIP or Ticker) Purchase Date Purchase Price Number of shares purchased Q: After the data is entered, how long does it take the Calculator to respond with my adjusted shares and adjusted Cost Basis? Answer: Your calculation will be done instantaneously. Q: Can I submit a Calculator request if I do not know the date when the shares were acquired or the original price of the shares? Answer: The Calculator will be able to compute your adjusted shares and adjusted Cost Basis only if you enter this data into the system. If these items are not entered, the Calculator cannot do the calculation. Note: Interactive Data offers historical pricing dating back to Q: Does the Calculator compute the Unit Cost Basis or the Total Cost Basis? Answer: Both Unit Cost Basis or per share Cost Basis and Total Cost Basis adjustments are displayed in the results screen of the calculator. 33

34 Q: How far back in history does the Calculator's corporate action coverage go? Answer: In the majority of cases, corporate actions history will go back to the inception of the company, in some cases more than 100 years. Dividend coverage (used primarily for DRIPs) goes back to Securities pricing data goes back to TECHNICAL SUPPORT For assistance, call Technical Support at (800)