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URL:  http://boards.fool.com/maybe-people-should-have-been-more-careful-in-24292889.aspx

Subject:  Re: The Cost Basis Crisis Date:  6/30/2006  3:12 PM
Author:  wrjohnston91283 Number:  87625 of 121450

Maybe people should have been more careful in keeping records. Today with personal finance software it’s very simple, but that doesn't help if you started purchasing during the Carter administration. Still, you should have been keeping a running log of each purchase, split, spin-offs and other events that affect the tax basis.

Naturally, politicians believe forcing more legislation is the answer. While $17 billion is a lot of money, brokerages are going to see a huge increase in costs, especially among clients who transfer securities in or out, and the receiving brokerages do not know the basis. I'm 22, and have used three brokerages and have transferred in physical stock certificates twice. You can't expect someone to stay with the same brokerage their entire life.

A better solution would be more stringent auditing, with penalties for underreporting to help offset the costs of additional auditing. This would in effect force people who don't keep good records to do so, while keeping costs down for those who do take the time and care to manage their investments properly. Those who properly report and pay taxes should not have to pay for those who illegally or incompetently underreport their gains.

WRJ

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