As we approach the end of the year, many advisors are taking the time to analyze their client’s accounts, searching for opportunities to save them money on this year’s income taxes. Since each client’s taxable situation is unique, it is important to understand how cost basis is handled in AssetBook and what useful tools are available to help you with this effort.
We also thought it would be useful to explain in detail the tax lot information being imported into AssetBook from your custodian that could be extremely useful when considering tax harvesting opportunities.
Tracking Cost Basis in AssetBook
There are two ways in which we track cost basis in both AssetBook systems:
- Internal cost accounting system
- Importing tax lots from the big 4 custodians
Using AssetBook internal cost accounting feature
Our internal cost accounting system can track cost basis using the following standard methods:
- High Cost
- Low Cost
Using the imported custodian tax lots feature
This is the preferred method, since by using your custodian’s tax lots mitigates the chance for discrepancies between your custodian’s tax reporting and your own tax reporting. To use your custodian’s tax lots, notify your custodians that you wish to receive the files. In AssetBook, enable custodian tax lots by clicking the “Use Custodian Cost” box on each account record.
Tools to identify tax saving opportunities
We thought it would be useful to explain in a couple of tools available that could be extremely useful when considering tax harvesting opportunities.
Tax Considerations tile in the Household Dashboard
The Tax Considerations tile is a very good way to see your client’s tax picture at a glance. The tile shows you all taxable income, short and long term realized gain/loss. It also displays the client’s top 3 unrealized losses for positions in taxable accounts.
Account Unrealized Gains/losses Report
Once to get a look at your client’s tax picture, run the unrealized gain report. This report can be run at either the Household or Accounts levels.
Other useful reports
- Household Rebalancing by Class with Last Buy Date (rebalancing report that shows cost basis and gain/loss for each position).
- Advisor Positions Unrealized Gain/Loss (Global report across clients)
- Advisor Positions Unrealized Gain/Loss Sums (Global report across clients)
For more detail on using AssetBook for tax management and planning, click here do download the complete white paper.