I'm intrigued. "Follow the money" is often the ulitmate answer in business and politics. So, let's look at this from the other side. Say I'm buying a house that I have a company/contractor build for me. They have a GC and some of their own subs as well as others they hire. Each business has their "Resale number" so no one pays taxes up front. Now when the house is done, I come along and pay for it with a mortgage, but (at least in Minnesota) I do not pay any sales tax on the house purchase. So what happens to the sales tax that is supposed to be collected? Is the house purchase price artificially inflated by the builder to accomodate what the contractor should send in to the state? When one sub does work for (sells their services to) another one how does this tax get paid?

dave100: that's interesting and had to do some surfing. Cutting & pasting the whole article I found since this was quite readable and, Luddite that I am, my attemps at links go off into cyberspace. Don't throw away anything you've faithfully saved till now - quarterly statements, confirmations, etc. since the buy/sell, gain/loss tracking goes forward and it's still up to you to be able to track your dealings backward. Right? I have a couple of brokerage accounts as well as investments outside brokerages - no problem there as I can see. But I initially received, as a gift, a block of stock in our local power company back in the 70's. (I still have the initial cost basis, etc. paperwork). But I have always reinvested the dividends to purchase more shares and the new cost basis is, of course, reflected on the next statement. I've saved every one of these statements over the approx. 40 years in the event I'd ever sell some of it since any sale is going to involve a real mix of share price. I like hard copies of things; I don't do much online tracking. Consequently I have boxes of "important" investment papers all in good order. The beauty of it is my heirs will not be pulling their hair out trying to find things when THAT TIME comes. (We've done enough sifting in dealing with others' estates to have learned some valuable lessons.) The article: [Broker-dealers, mutual fund companies and fund custodians are updating systems to comply with the cost basis reporting requirements included in the Emergency Economic Stabilization Act of 2008. Brokers must begin reporting cost basis to the Internal Revenue Service and to taxpayers for trades beginning Jan.1, 2011; fund companies have until 2012 to comply. Custodians are not required to comply with the legislation, but they provide the technology as a service to their broker-dealer clients. For their part, wirehouses already track this data so the deadline is a non-issue for them. "The tech implications for cost basis are significant and if firms don't start now, they will never get it done in time," said Sean Cunniff, research director for brokerage and wealth management at Needham, Mass.-based TowerGroup. The aim is to guarantee full reporting of capital gains so the IRS receives its fair cut of investors' profits. Estimates from the Government Accountability Office and IRS put the amount of underreported capital gains at $7 billion to $11 billion per year. REDUCED TAX BILLS Ironically, because the technology allows for improvement of cost basis reporting, many advisers will be able to harvest losses more efficiently, reducing their clients' tax bills. Costs estimates for the enhancement range from $200,000 for a small, self-clearing broker-dealer to a multimillion-dollar expense for custodians, according to a participant who asked not to be identified. Systems within broker-dealers that require overhauls are the account transfer systems that interact with brokerage firms, as well as their order management systems. Historically, tracking cost basis has been a headache, a responsibility of investors who would have to dig through dusty old confirmations to determine the amount they paid for a stock or bond. For many firms, completing the fixes requires a multistep process that can frazzle the nerves of even the calmest, most experienced technologists. "This will take months just to scope out, and then you must build or buy a solution and integrate it with your current system," Mr. Cunniff said. "Then you test. Then you fix the bugs. Then you deliver." At Raymond James Financial Services of St. Petersburg, Fla., the battle to meet the deadline is under way. "We know it's a significant change and that's why we've started working on it already," said Josh Bohlander, senior manager in information technology. Hindering the project, however, are questions about how reporting should be done for wash sales, gifted securities, sales-load-basis deferral adjustments, and for fixed-income securities. "These are items not pinpointed in the current legislation," said Dale Skinner, a technology product manager with Raymond James. "We and the rest of the industry still need more clarification from the Internal Revenue Service on particular areas." Other firms are also waiting for the IRS to set a clear direction for the development effort. "We are still waiting for the IRS to make its final recommendations," said Teri Manton, a director in the product management and development group of Pershing LLC of Jersey City, N.J. Marjorie Qualey: Would like to see the IRS determine the format it wants the reports to use. "We still need to know exactly what format the IRS wants us to report it in," said Marjorie Qualey, vice president of product development and technology at Schwab Institutional in San Francisco. In response, a spokesman for the IRS said it was "continuing to work on the issue." Rather than build the upgrade themselves, some companies are retaining third parties to provide the software, an approach that OppenheimerFunds Inc. of New York pursued. "Due to the complexity of building this into our own systems, we decided that it made more sense to partner with [GainsKeeper]" to build this enhancement, said Christine Polak, vice president of operations at the mutual fund company, who declined to disclose the cost of the software. GainsKeeper, a provider of cost basis and tax software, is a division of Wolters Kluwer Financial Services in Minneapolis. Over the next two years, Ms. Polak will collaborate with the vendor to provide clients with cost basis data, in the form of their choice. Under the legislation, clients can select the way they want to report cost basis data to the IRS, such as the average cost basis or on a first-in-first-out basis. Although earlier attempts to pass the cost basis rules failed, Pershing assumed that passage was inevitable and began working on the project, Ms. Polak said. "The whole idea of these regulations isn't new to us; we are very well-positioned and have been working closely with [the Securities Industry and Financial Markets Association of New York and Washington] for several years now in planning for this legislation," said Ms. Manton. So far, the firm has developed a Form 1099 tax and year-end statement that breaks out gains and losses and addresses the bulk of the regulatory requirements, she said. Some broker-dealers, such as Cambridge Investment Research Inc. of Fairfield, Iowa, and Securities America Inc. of Omaha, Neb., receive cost basis information from their custodians, Pershing and National Financial Services LLC of Boston, respectively.] (Davis Jankowski, InvestmentNews, December 14, 2008)

Hello dream garden, Around here, having had a skiff of snow over the past few days, the concept of a garden is pretty well a "dream" at present - though I think that it's past time that I should put some seeds into the earth that I stored in pots in the basement. Thank you for your message of appreciation. Yes - "stretcher" is an interesting site. Some years ago when my son and I had a display at a fall fair, mine being along the line of "Making Your Dollars Work Harder" and "How to Pay Less Income Tax", a man came up to me and asked me what right I had to call myself a financial planner. I told him that all that I have to sell someone is looking at money a little differently than they, for if I look at it (almost) identically, they won't pay to talk to me ... and if I look at it from a hugely different perspective, they'll clap their both hands over both ears and think, "Oh, Lord - no way am I even going to consider trusting management of my precious money to *this* flake!!". I said that it seemed to me that the time when I began to look at money somewhat differently than most city folks (my major potential market) was when I grew up on the farm. He replied, rather vehemently, that that had nothing to do with it! I told him that I thought that it did, for most city folk have regular income and if they miss a couple of paycheques, are crying the blues such that you think that the world was about to end, while for most farmers irregular income is an ongoing fact of life. Further, most city folk don't think much about the difference between cash flow and capital - their main capital issue being their mortgage, on which they make regular payments without thinking. They have no idea how one needs to consider, having enjoyed a little larger income than usual this year, whether to do an overhaul of the tractor motor, or trade it on a better one, and whether one can afford to get a better/bigger combine this year, or buy some more cattle, or hogs, put a new roof on the barn, make an extra payment on the mortgage, etc. I also told him that I'd taken the courses that stockbrokers take - much more complex than the training of most mutual fund sales folk. Plus six courses (passed 5) leading to title of Chartered Financial Planner - later revised, I'd have to start all over: at 70 or so (now 77), and receiving 3 pensions - I thought not. By the way, having done a preliminary calculation of my tax for this year, I find that I may be paying something under 10% of income in tax - about half of the amount of my charitable contributions (without considering the political ones, that are partially deductible, up to a limit, as well). Hope you enjoy your spring - and your garden. Mine, in the corner of a field of beans for processing (freezing, canning) got sprayed last year ... twice! ole joyful P.S. When you live among refugees for a time - it gives you a whole different outlook not only on money and its uses, but on various other dimensions of living, as well. Including being thankful for the accident of birth that had me born in this country rather than in many others - but they are God's people, too - and I owe them something o j

Do you know what is bad etiquette bry911, being a know it all. Well then you are going to hate this next part. Most large states just raise prices based on sales for the year. I don’t think anyone needs a lecture on it. Well that is a lot of wrong in one sentence. States don't typically handle property assessments and most don't even collect ad valorem taxes, they simply set a maximum rate. Individual taxing authorities, which is typically counties but it can be multiple small counties or subdivided cities, decide on the local rate (up to the state's maximum rate) and handle assessment in their area. There are two revenue schemes for property taxes in local governments. The less common is a flat rate x the property tax base. The more common is property tax treated as a residual source of revenue. That means property taxes are used to bridge the gap between all non-property tax revenues and budgeted expenditures. Because rates are hard to change and there are state mandated limits, the most common way to make revenue goals is [the amount required from property taxes / tax rate = property tax base]. It is much easier to increase the property tax base than it is to increase the property tax rate and there is much less political fall out. If new sales are sufficient to increase the property tax base, assessors may not do additional assessment. If insufficient they will reassess. Generally, the more expensive your home the more likely they are to revalue the property. I have had two property tax value increases since I purchased my home in May of 2016. Although I study inefficiency in capital, I am an accounting professor. So yes, I happen to know quite a bit about government accounting. I don't know it all and I am willing to learn more about the subject I am a professor of. But Cody found a thread he could join in on. A college kid trying to work his way through college. I was trying to build the kid up. Well let's not worry about someone following advice into financial harm so long as someone feels good. I am one of those old fashioned professors, who marks incorrect answers, wrong. However, in this case I didn't say Cody was wrong, I simply gave a qualification of his answer to check your local area.