When you move a brokerage account to a new firm, your cost basis is supposed to travel with your shares: federal law requires the delivering broker to send cost basis information to the receiving broker within 15 days of a transfer of covered securities.1Office of the Law Revision Counsel. 26 USC 6045A – Information Required in Connection With Transfers of Covered Securities That rule sets the framework for cost basis in a broker transfer, but it leaves plenty of room for missing lots, incorrect prices, and quiet mismatches that surface only when you sell. Understanding what the rule covers, what it doesn’t, and what you have to verify yourself is the difference between a clean handoff and a mess on next year’s 1099-B.
What the 15-Day Rule Actually Covers
The transfer obligation applies only to “covered” securities. Whether a lot is covered depends on when you bought it:2Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers
- Stocks and ADRs acquired on or after January 1, 2011
- Mutual funds and dividend reinvestment plan shares acquired on or after January 1, 2012
- Debt instruments and options acquired on or after January 1, 2014
For those lots, the delivering broker must pass basis, acquisition date, and holding-period information to the receiving broker, which then uses it when reporting your eventual sale on Form 1099-B.3Internal Revenue Service. Instructions for Form 1099-B
Anything acquired before those cutoffs is non-covered. The broker has no duty to track its basis, no duty to send it, and after the transfer, your new broker will typically show a blank or zero cost basis for those positions. If you sell them without supplying a figure, the IRS sees the full sale price as gain. If you’ve held any position since before 2011, dig out original trade confirmations or old account statements before you close the old account. Once it’s closed, retrieving that data can be difficult or impossible.
Match Your Cost Basis Method Before You Move
Your cost basis method controls which shares are treated as sold first when you place a sell order, and that choice directly controls your taxable gain. Most brokers default to First-In, First-Out (FIFO), which sells your oldest shares first. Specific Identification lets you (or an automated rule like Highest Cost or Last-In, First-Out) pick a particular lot at the time of trade. Average Cost is available only for mutual fund shares and shares acquired through dividend reinvestment plans, and it has to be elected.4Internal Revenue Service. Mutual Funds (Costs, Distributions, etc.) 1
Check the method on your current account and set the same method at the receiving broker before the shares land. If your old broker uses specific identification and your new broker defaults to FIFO, the new firm will start selling your oldest lots first without asking. That mismatch can trigger short-term gains you didn’t plan on or unwind a tax-loss harvesting strategy you’ve been running for years.
How the Transfer Timeline Works
Most broker-to-broker transfers go through the Automated Customer Account Transfer Service (ACATS), run by the National Securities Clearing Corporation.5DTCC. Automated Customer Account Transfer Service You initiate it at the new broker. Under FINRA rules, the delivering firm has one business day to validate the request or raise an objection, then three business days to complete the transfer of assets once validated.6Financial Industry Regulatory Authority (FINRA). FINRA Rules – Customer Account Transfer Contracts (Rule 11870) End-to-end, expect roughly four to six business days.
During that window your old account is frozen. Open orders are canceled and you cannot place new trades. The only exception is option positions expiring within seven business days.6Financial Industry Regulatory Authority (FINRA). FINRA Rules – Customer Account Transfer Contracts (Rule 11870)
Cost basis usually lags the shares. It is normal to see positions appear at the new broker before the basis data catches up. What’s not normal is the data never arriving, arriving incomplete, or showing figures that don’t match your records. Don’t sell anything at the new broker until you’ve confirmed each lot looks right.
What to Save Before You Initiate the Transfer
Most transfer problems come down to missing records. Before you file a transfer request, download everything the current broker has on file:
- Monthly and year-end statements going back as far as the platform allows
- Year-to-date transaction reports
- Trade confirmations
- Any cost basis or realized/unrealized gain reports the platform offers
- Records of every dividend reinvestment, because each reinvested dividend creates its own tax lot with its own basis
A fund you’ve held for ten years with quarterly reinvestment can have 40 or more micro-lots. Every one of them has to transfer correctly, and dividend reinvestment shares are the most common casualty when basis data goes missing.
Also note anything the current broker has already adjusted: wash sale disallowances applied to specific lots, and corporate action changes from splits, mergers, or spin-offs. Those adjustments change both the share count and the per-share basis without any new purchase, and if they don’t carry over, the new broker’s records will be wrong from day one.
What to Check After the Shares Land
Once the transfer settles, compare the lot-level detail at the new broker against the records you saved. For each position, verify:
- The number of lots matches
- Each acquisition date is correct
- Per-share cost is correct on each lot
- Any wash sale adjustments carried over
- Split, merger, and spin-off adjustments landed intact
- Dividend reinvestment lots are all present
Most brokers offer an online tool to manually enter or correct historical basis for individual lots. Use it now, while you still have the records in front of you and before any sale locks in an error. Catching a basis problem before you sell is straightforward. Catching it after a 1099-B has been filed with the IRS is a much longer process.
Fixing Incorrect Basis on Your Tax Return
If a broker reports the wrong basis on your 1099-B and you can’t get it corrected before you file, you don’t have to accept the figure. Report the correct basis on Form 8949, enter Code B in column (f) to signal that you’re adjusting the broker-reported basis, and enter the correction in column (g).7Internal Revenue Service. Instructions for Form 8949 The IRS receives one number from the broker and a different number from you, and Code B tells them why. Keep the supporting records (old statements, trade confirmations, gift or inheritance documentation) in case the IRS asks.
Wash Sales Are on You During a Transfer
The wash sale rule disallows a capital loss if you buy substantially identical shares within 30 days before or after the sale, and the disallowed loss is added to the basis of the replacement shares.8Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities Brokers only track wash sales within the same account and same CUSIP. They do not coordinate with each other.
That gap opens wide during a transfer. Sell a stock at a loss at the old broker, and within 30 days the same security shows up in the new account through a purchase or an automatic dividend reinvestment, and you’ve triggered a wash sale that neither firm will flag. The rule also crosses account lines you might not expect, including your IRA and your spouse’s accounts. Keep a personal log of every sale at a loss during the 60-day window around any transfer, and check it against activity at both brokers before you file.
Gifted, Inherited, and Digital Asset Lots
Some lots don’t have a normal purchase price behind them, and their basis rarely rides ACATS cleanly. Expect to enter these figures by hand at the new broker.
Gifted Shares
When someone gives you stock, your basis generally carries over from the donor. You need the donor’s adjusted basis, the fair market value on the gift date, and any gift tax the donor paid.9Internal Revenue Service. Property (Basis, Sale of Home, etc.) If the fair market value on the gift date was equal to or higher than the donor’s basis, your basis is the donor’s basis. If it was lower, you have a split-basis situation: the donor’s basis for calculating a gain, and the lower fair market value for calculating a loss. A sale price between the two produces neither.
Inherited Shares
Property acquired from a decedent takes a “stepped-up” basis equal to the fair market value on the date of death, or the alternate valuation date (six months later) if the estate elected it.10Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent Inherited shares are treated as long-term regardless of the original owner’s holding period. The step-up covers stocks, bonds, mutual funds, and real estate, but not retirement accounts like 401(k)s or IRAs. In community property states, a surviving spouse may receive a full step-up on both halves of jointly owned assets. When transferring inherited shares, verify that the new broker shows the stepped-up basis and the date of death (or alternate valuation date) as the acquisition information, not the original owner’s purchase history.
Digital Assets
Starting in 2025, custodial digital asset platforms, hosted wallet providers, and digital asset kiosks are treated as brokers and must report on Form 1099-DA.11Internal Revenue Service. Final Regulations and Related IRS Guidance for Reporting by Brokers on Sales and Exchanges of Digital Assets Decentralized and non-custodial platforms that never take possession of your assets are currently excluded.
Crypto transfers get less basis protection than traditional securities. When you move digital assets between custodial platforms, the receiving broker can use acquisition information from you or the transferring broker for lot ordering, but cannot use that transferred-in data to report basis on the 1099-DA. Transferred-in units will typically show no reported basis, with Box 8 checked to indicate that customer-provided information was used for lot ordering.12Internal Revenue Service. 7Internal Revenue Service. Instructions for Form 8949