Using the ONESOURCE Trust Tax Return of Capital Cost Basis Adjustment Option

ONESOURCE Trust Tax offers the

Calculate Return of Capital Cost Basis Adjustment

option to automatically adjust cost basis on sales at the time of return processing. This option is on the Options and Overrides page and is shown in the graphic below. The option in the

Capital Sales

category applies to tax return processing (1041, 990, 5227) and the option in the

Enhanced 1099

category applies to 1099 processing.

If the options are set to

Yes

, processing returns once factors are applied or entered, will incorporate the automatic cost basis adjustment when the asset’s holding period falls within a payment period(s) that included a return of capital factor. The automation applies to sales being reported in that year’s tax processing. It does not apply to sales that have already occurred in the subsequent tax year even if already loaded to the ONESOURCE Trust Tax database.

For example, Account A acquired Asset 1 in 2010 and sold shares on May 18, 2019 and January 31, 2020. Asset 1’s 2019 income was reallocated using factors provided in 2020 and the reallocation included a factor for return of capital. Assuming the options above are set to

Yes

when Account A is processed, the cost basis on the May 18 sale will be adjusted by the amount of return of capital applicable to the number of shares sold. Although the January 31, 2020 sale already occurred at the time the return of capital factor is applied, the cost basis of that sale will not be automatically adjusted by the amount of return of capital applicable to its shares. The cost basis will either need to be manually adjusted in ONESOURCE Trust Tax or adjusted on the trust accounting system, and an updated sale record will need to be bridged to ONESOURCE Trust Tax.