DTCC has signed on its first customers for AccuBasis, the new service that solves a problem that has plagued the industry and its investors for years: access to cost-basis information. AccuBasis makes this information available to firms and their clients quickly, accurately and efficiently.

The inaugural customers for AccuBasis are Aflac, a major U.S. insurance company, Horizon Publishing Company, a leading publisher of investment newsletters for individual investors, and the Arizona-based First American Stock.

Investors need cost-basis information to properly report gains or losses when filing tax returns and for determining the unrealized gains or losses of a securities position. While researching cost-basis information has traditionally been difficult, time-consuming and expensive, AccuBasis automates and streamlines the research process and delivers accurate, adjusted cost-basis information in a matter of seconds.

Why AccuBasis?
"AccuBasis looks like an outstanding solution to a thorny problem that has bothered millions of investors in the United States, said Charles Carlson, chief executive officer of Horizon Publishing and author of eight books on personal investing.

"We chose to offer AccuBasis to our customers because it's the quickest, easiest and most economical way for them to access cost-basis information, said Joan DiBlasi, senior manager, Shareholder Services, Aflac. "Researching cost-basis information can be a long, drawn-out manual process. We needed to make this information easily available to our customers, and AccuBasis does just that. Aflac is the number-one provider of guaranteed-renewable insurance in the United States.

How it works
The new service, launched in January, is Web based. The investor goes to the Web site of a security issuer, transfer agent, broker/dealer, mutual fund company or other financial service firm and clicks on the cost-basis link. This connects them to the AccuBasis Web site, where they can access cost-basis information by inputting a CUSIP number, the security name or ticker symbol of the security and the approximate date of purchase - the year will do.

"The cost-basis service automatically calculates the historical security changes caused by stock splits, mergers, dividend reinvestments and every other possible cost-basis adjustment, including security pricing history that dates back to 1925, said Joseph Trezza, DTCC vice president, Asset Services. "It quickly retrieves financial information from its massive database, recreates a complete history of an individual security and then delivers the accurate, adjusted cost basis - all within a matter of seconds.

The Internal Revenue Service (IRS) used the cost-basis service in the 2005 Tax Gap Report that identified $11 billion in under-reported capital gains taxes from 2001, and major accounting firms are using it as a means of verifying and providing relevant cost-basis information reported on Schedule D and 1099 forms.

A long-standing headache
Cost-basis information has always been a problem for investors, causing customer dissatisfaction with broker/dealers, issuers, transfer agents and other financial executives that investors rely upon. Cost-basis information is determined by a variety of factors that can affect the value of a security. The original purchase price and how it was purchased - through a dividend reinvestment plan, an employee stock option plan or at a discount market price - has a direct impact on cost basis, as do corporate actions such as stock splits, mergers or spin-offs.

Investors often assume their transfer agent or issuer can supply them with the information. And while some firms provide a form of cost-basis reporting, there's no guarantee that the information is complete, accurate or up to date. Mutual fund companies, for example, get thousands of requests a year for tax information, with investors asking the companies to reconstruct the cost-basis history of a security. This process - which now can take hours or even days to complete - would be automated and streamlined by the new service, reducing costs for both the fund company and investor.

AccuBasis is being offered through a strategic alliance with NetWorth Services, an Arizona-based firm that developed the cost-basis database.

"This service will provide the industry with the cost-basis tool it has needed for some time and will also serve as a sales and marketing tool since many financial institutions and service providers see AccuBasis not only as an important value-added service for present clients, but as a way to attract new customers, said Nico Willis, chief executive officer of NetWorth.

The Taxpayer Advocate Service, an independent office within the IRS that works to protect individual taxpayer rights, has reported that the cost-basis service "can reduce taxpayer burden by streamlining documentation of cost-basis calculations during audits and can create a reliable standard for taxpayers, preparers and the IRS.

AccuBasis is offered through DTCC Solutions LLC, a DTCC subsidiary. @

[For more information, contact Joyce Rosen, DTCC product manager, at 212.855.3935 or jrosen@dtcc.com.]