System and method for investment accounting and auditing

• US 20070118445A1
• Filed: 11/22/2006
• Published: 05/24/2007
• Est. Priority Date: 11/23/2005
• Status: Abandoned Application

• Current Assignee: Bruce Hechler
• Original Assignee: Bruce Hechler
• Inventors: Hechler, Bruce
• Application Number:
  US11/603,657
• Publication Number:
  US 20070118445A1
• Time in Patent Office: Days
• US Class Current: 705/30
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A system and method allows a user to accurately track and account for investments, as well as determine and present financial and tax consequences of financial and realizable events related to such investments. The system receives identifying data for a security, which includes at least data regarding a tax lot method. The system correlates a financial event, which can be an income event, capital change event, or a combination thereof, to the security. The system then determines a tax consequence based on the financial event and the identifying data. Finally, the system presents a complete security audit report comprising the tax consequence, a transaction ledger, a security financial position, an IRS-compliant Schedule “D,” an IRS-compliant Schedule “B” and the tax opinion. Multiple databases can be utilized including but not limited to a tax opinion database, capital change event database and income event database, among others. Further, the databases can be remotely located from one another.

Claims

1. A method of auditing and verifying tax liability of a security and providing a security audit report comprising the steps of:

receiving identifying data for a security, the identifying data comprising a predetermined tax lot method;

correlating a financial event to the security;

determining a share effect based on the financial event and the identifying data;

determining a cost basis effect based on the financial event and the identifying data;

determining a tax consequence based on the financial event and the identifying data;

retrieving a tax opinion corresponding to the tax consequence; and

presenting a security audit report comprising the tax consequence, a transaction ledger, a security financial position and the tax opinion.

2. The method of claim 1 further comprising the step of correlating a taxation status to the financial event, wherein the tax consequence is further based on the taxation status, and wherein the security audit report further comprises the taxation status.

3. The method of claim 2 wherein the security audit report further comprises an IRS Schedule “

D”

corresponding to the tax consequence and an IRS Schedule “

B”

corresponding to the tax consequence.

4. The method of claim 1 wherein the identifying data is selected from a group consisting of a security identification number, a transaction type, a transaction date, a beginning date, an ending date, a share position and a share price.

5. The method of claim 1 wherein the security is selected from a group consisting of a stock, a preferred stock, a bond, a convertible stock, an open-ended mutual fund, a closed end mutual fund, a corporate bond, a municipal bond, a government backed mortgage, a collateralized mortgage security, a non-U.S. based security, a U.S. Treasury security, an option and a warrant.

6. The method of claim 1 wherein a plurality of securities is used.

7. The method of claim 6 wherein the plurality of securities is selected from a group consisting of stocks, preferred stocks, convertible stocks, bonds, open-ended mutual funds, closed end mutual funds, corporate bonds, municipal bonds, government backed mortgages, collateralized mortgage securities, non-U.S. based securities, U.S. Treasury securities, options, warrants and any combination thereof.

8. The method of claim 1, wherein the financial event is stored in a financial events database and the tax opinion is stored in a tax opinion database, the tax opinion database being remotely located from the financial events database.

9. The method of claim 2, wherein the financial event is stored in a financial events database and the tax opinion is stored in a tax opinion database, the tax opinion database being remotely located from the financial events database.

10. The method of claim 9 wherein the taxation status is stored within a taxation status database.

11. The method of claim 10 wherein the taxation status database is remotely located from the financial events database.

12. The method of claim 1 wherein the financial event is selected from a group consisting of an income event and a capital change event.

13. The method of claim 12 wherein a plurality of financial events is used.

14. The method of claim 1 wherein the financial event comprises an income event and a capital change event.

15. The method of claim 14 wherein the income event is stored in an income event database and the capital event is stored in a capital event database.

16. The method of claim 15 wherein the capital event is selected from a group consisting of a merger, a conversion, an exchange, a merger election, a spin-off, a distribution, a recapitalization, a liquidation, a partial bond call, a stock split and a stock dividend.

17. The method of claim 1 wherein the tax consequence is selected from a group consisting of an adjusted cost basis of the security, income cash and an adjusted shares position.

18. The method of claim 1 wherein the security audit report further comprises an IRS Schedule “

D”

corresponding to the corresponding to the tax consequence and an IRS Schedule “

B”

corresponding to the tax consequence.

19. The method of claim 18 wherein the security audit report is presented through a graphic user interface display.

20. The method of claim 18 wherein the tax opinion is compliant with IRS standards.

21. The method of claim 18 further comprising the step of receiving merger election data, wherein the capital change event is the merger election.

22. The method of claim 1 further comprising the step of receiving instructions to reinvest dividends.

23. A method of auditing and verifying tax liability of a security and providing a security audit report comprising the steps of:

receiving identifying data for a security, the identifying data comprising a predetermined tax lot method;

correlating a capital change event to the security;

correlating a taxation status to the capital change event;

determining a share effect based on the financial event and the identifying data;

determining a cost basis effect based on the financial event and the identifying data;

determining a tax consequence based on the taxation status, the capital change event and the identifying data;

retrieving a tax opinion corresponding to the tax consequence; and

presenting a security audit report comprising the tax consequence, a transaction ledger, a security financial position, the taxation status and the tax opinion.

24. The method of claim 23 further comprising the step of correlating an income event to the security.

25. The method of claim 24 wherein the security audit report further comprises an IRS Schedule “

D”

corresponding to the corresponding to the tax consequence and an IRS Schedule “

B”

corresponding to the tax consequence.

26. The method of claim 25 wherein the income event is stored in an income event database, the capital change event is stored in a capital change event database and the tax opinion is stored in a tax opinion database, the tax opinion database being remotely located from at least one of the capital change event database and the financial event database.

27. The method of claim 26 wherein the taxation status is stored in a taxation status database.

28. The method of claim 23 wherein the capital event is selected from a group consisting of a merger, a conversion, an exchange, a merger election, a spin-off, a distribution, a recapitalization, a liquidation, a partial bond call, a stock split and a stock dividend.

29. The method of claim 23 wherein the identifying data is selected from a group consisting of a security identification number, a transaction type, a transaction date, a beginning date, an ending date, a share position and a share price.

30. The method of claim 23 wherein a plurality of securities is used.

31. The method of claim 30 wherein the plurality of securities is selected from a group consisting of stocks, preferred stocks, convertible stocks, bonds, open-ended mutual funds, closed end mutual funds, corporate bonds, municipal bonds, government backed mortgages, collateralized mortgage securities, non-U.S. based securities, U.S. Treasury securities, options, warrants and any combination thereof.

32. The method of claim 23 further comprising the step of receiving merger election data, wherein the capital change event is the merger election.

33. A system for auditing and verifying the tax liability of a security and providing a security audit report comprising:

a first database containing first data comprising at least one selected from the group consisting of an income event corresponding to the security, a capital change event corresponding to the security, and a taxation status corresponding to the security;

a processor capable of receiving identifying data for a security, wherein the processor is capable of determining a tax consequence based on the first data;

a second database containing a tax opinion; and

a device capable of presenting a security audit report comprising the tax consequence, a transaction ledger based the first data, a security financial position and the tax opinion.

34. The system of claim 33 wherein the security audit further comprises an IRS Schedule “

D”

corresponding to the corresponding to the tax consequence and an IRS Schedule “

B”

corresponding to the tax consequence.

35. The system of claim 33 wherein the first database comprises an income event database containing an income event corresponding to the security and a capital change event database containing a capital change event corresponding to the security.

36. The system of claim 35 wherein the first database further comprises a tax database containing a taxation status corresponding to the security.

37. The system of claim 33 wherein the second database is remotely located from the first database.

38. A method of determining the financial history of a security comprising the steps of:

receiving identification data for a security, the identifying data comprising at least an estimated security purchase date;

retrieving at least one prior CUSIP number or at least one company name based on the identifying data;

correlating, beginning from the estimated security purchase date, at least one financial event to the prior CUSIP number or the company name; and

determining a number of shares or a related security based on the financial event.