Tax FAQs

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 purposes?

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 any time.

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 firm?

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 and inheritances.
• The heaviest box of old statements weighed 25 pounds.
• Go ahead. Give us a challenge.