New Tools Solve Complicated Requirements for Funds & Individual Investors

GainsKeeper®, part of Wolters Kluwer Corporate & Financial Services division, addes new tax reporting tools to its three industry-leading tax lot accounting suites – GKAdvisor™ used by funds, GKBrokerage™ for shareholders, and FundTax™ used by individual investors – in September.

“Our tax lot accounting suites offer an automated solution designed to calculate key fund and investor figures, allowing both professionals and individual investors to spend significantly less time compiling and attempting to make calculations based on tax- relevant date,” Sanjeev Doss, GainsKeeper director and tax counsel said in announcing the additions.


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Due to the small window of time allowed between year-end closing of corporate books and the deadline for communicating information to shareholders and the Internal Revenue Service (IRS), tax reporting for mutual fund companies and brokerage firms generally occurs in a compressed timeframe and errors reported to the IRS can result in costly penalties and damaged reputations. Individual investors face many of the same challenges in calculating gains and losses for annual tax returns. GainsKeeper’s automated solutions are designed to calculate key tax figures allowing professionals to spend significantly less time compiling tax data and all reports can be delivered in HTML, text, XML, PDF and Excel formats.

The new additions include:

  • Qualified Dividend Income (QDI) -- QDI reporting includes calculation of the 61-day holding period requirement, foreign qualification, and domestic qualification. The reporting takes into account hedged positions and the reduction in holding period. Qualified dividends are taxed at 15 percent in most cases while non qualified dividends are taxed at ordinary income tax rates which can be as high as 35 percent making the incorrect identification of qualified dividends a potential costly mistake.

  • Dividends Received Deduction (DRD) -- DRD reporting functionality is designed to calculate the 46-day holding period requirement; taking into account hedged positions and the reduction in holding period. Corporate investors can deduct 70 percent of DRD qualified dividends; while those not meeting DRD requirements must include 100 percent of the dividend in the calculation of income. Failure to calculate DRD dividends can result in overpayment of taxes.

  • Dividend Tax Expense -- Extensive shorting can cause significant compliance issues around the capitalization rules with failure to capitalize the payments resulting in the under payment of taxes and potential IRS scrutiny. The Dividend Tax Expense report automatically identifies payments in lieu of dividends paid on short stock closed within 45 days and capitalizes these payments to the stock’s cost basis.

GainsKeeper Institutional Services (GKIS) provides application service provider (ASP) solution for financial institutions, enabling them to offer sophisticated tax lot accounting services to their customers without incurring the high cost of building, maintaining and housing the systems that would otherwise be needed and are utilized by the brokerage, mutual fund and fund administration industries.

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