1. Do you work with our accountant?
With a client’s permission, we will always work with
their other advisors. In fact, we strongly advise our clients
permitting us to work as a team on their behalf. Allowing
us to speak with your accountant directly and/or provide data
and information assists in seamless handling of your financial
needs. For those advisors with the right technology, we can
provide the advisor web-based access to much of our planning
technology. Let us stress again: we initiate these relationships
specifically upon permission from our clients.
2. What do you provide for me at year-end for tax
Although the custodian of the assets is the official
record keeper, Blunck Financial daily downloads data about
the accounts under our discretionary management. Using sophisticated,
professional portfolio management software enables us to continually
monitor client transactions and tax basis. Consequently, we
can provide your, and/or your tax preparer, detailed tax-related
information (e.g., realized and unrealized short- and long-term
gains, tax lot accounting, taxable and tax free income) at
3. Does Blunck Financial prepare income tax returns?
No, we don't. We prefer to work directly with
your accountant or tax preparer to coordinate on tax issues.
4. How do accountants respond to working with you?
Accountants welcome our good records and reports. The information
is timely, accurate and complete. At tax time, it saves time
and headaches for you and your accountant.
In fact, our reports are a welcome relief to the lack of detailed
cost basis information provided by most brokerage firms. Ever
tried getting your cost basis information from your broker?
If so, you may know what we mean. See
sample Realized Gains and Losses Report
5. Why can't I just use the 'average tax cost basis'
information provided by my mutual fund company or brokerage
You can, but it may not work to your advantage to
do so. There are a number of accounting methods accepted by
the IRS to keep track of cost basis for sales. Average Cost
is only one of them. The others are: Specify individual tax
lots, FIFO, LIFO, Highest Cost, Lowest Cost, and Minimum Short
Term Gain. Most mutual fund companies use average cost basis
(if they report cost basis at all). With thoughtful tax planning,
we always ask what tax results we are trying to accomplish
for you (before the investment gets sold).
- Are we selling to produce a loss (to offset other gains)?
- Are we selling to produce a gain (to offset other losses)?
- Do we want a tax neutral result (no loss or gain) because
we want no tax impact at all?
The answer to these questions guides the decision on which
individual tax lots to sell. You can only do this kind of
tax planning when you (1) have kept track of individual
tax lots, and (2) have the capability (in our case through
our portfolio accounting software) to keep the kind of records
the IRS requires to document your decisions before
you sell the investments.
6. Why bother with all the record keeping?
Because it can save you significant money on taxes. Ask our
clients and their accountants.
7. How do you get all my historical tax cost basis?
On a project basis. We start with the big box of 'stuff' you
have kept over the years (all the statements and confirms
from as far back as you have information). If stocks or mutual
funds have been inherited, we ask for the estate tax returns.
Then Mary Ann organizes and enters your historical cost basis
information into our Advent portfolio accounting software.
We include a good set of footnotes when we send the finished
cost basis report to both you and your accountant. If there
is missing information (and most of the time there is) we
do the research to fill in the gaps.
8. It sounds terrible to organize all my historical
statements and confirmation statements. I
don't know if I will ever get to it.
Please don't think you need to organize or summarize all your
statements before you bring them to us. Mary Ann actually
prefers that you bring the 'box of everything' in whatever
shape it is in now. Mary Ann knows what she needs and what
she is looking for.
9. What if I don't have all the information?
Hardly anyone does. We are good at filling in the gaps. We've
learned a thing or two about research over the years.
- So far our largest cost basis project went back in
time 16 years.
- We have traced cost basis through two family deaths
- The heaviest box of old statements weighed 25 pounds.
- Go ahead. Give us a challenge.