SPY ACATS Non-Covered Missing Basis: Tax Lot Lineage Defense
PROOF LOG #031
SPY ACATS Non-Covered Missing Basis: Tax Lot Lineage Defense
ACATS moved the position. The receiving surface did not carry the basis. FDL verified the prepared source-lot path.
The shares arrived, but the receiving-custodian surface showed non-covered / basis not reported.
FDL ties the Schwab sale back to the CPA-prepared Morgan Stanley source lot.
ACATS can move the position.
The receiving-custodian surface may not carry the basis.
In this SPY case, the CPA-prepared source record existed before the transfer: a May 2023 SPY source lot with $4,130,100 of basis.
FDL did not discover missing basis or repair the broker record. It verified the prepared source-lot path after the ACATS transfer.
Non-covered surface ≠ lost basis path.
Proof Summary
Problem: After ACATS, the receiving-custodian surface showed non-covered / basis not reported for the SPY position.
Prepared input: The CPA-prepared Morgan Stanley source lot, ACATS OUT / IN path, and later Schwab sale were entered into FDL as a reviewable transfer record.
Board result: Tax Report shows the Schwab sale with $4,130,100 of basis and a LONG result; Audit Trail preserves the original acquisition date and carryover unit basis.
Boundary: FDL does not infer missing basis or replace CPA judgment. It verifies prepared, in-scope source-lot records after the transfer exists.
WATCH THE BASIS PATH
Watch a non-covered ACATS surface become a reviewable source-lot lineage.
- ACATS moved 10,000 SPY shares from Morgan Stanley to Schwab
- The receiving-custodian surface was non-covered / basis not reported
- FDL verified the CPA-prepared May 2023 source lot
- Tax Report shows $4,130,100 basis and $1,763,800 LONG gain
- Audit Trail preserves the source-lot lineage after transfer
- Tax Alpha Dashboard makes the carryover basis visible
EXECUTIVE PROOF
Receiving / Review Risk
- the account can move without a reviewable basis surface
- the receiving custodian may show non-covered / basis not reported
- the sale may need CPA-prepared source records
- the reviewer must preserve original acquisition date and basis
- the filing-facing result must not be inferred from the receiving surface alone
FDL Registry of Truth™
- prepared Morgan Stanley source lot remains the basis source
- ACATS OUT / IN stays a non-taxable transfer path
- Schwab sale is tied to the received carryover lot
- Tax Report uses the prepared carryover basis
- Audit Trail preserves the source-lot path after transfer
PHASE 1 — THE NON-COVERED SURFACE
10,000 SPY shares moved from Morgan Stanley to Schwab through ACATS.
The receiving-custodian surface showed non-covered / basis not reported.
The shares arrived. The basis path still needed review.
PHASE 2 — THE PREPARED SOURCE RECORD
The CPA-prepared May 2023 SPY source lot existed before the transfer.
FDL carried through $4,130,100 of prepared source basis and the original lot history.
FDL verified prepared source records instead of inferring missing basis.
PHASE 3 — THE FILING-FACING RESULT
Schwab later sold 10,000 SPY shares.
Tax Report shows $5,893,900 proceeds, $4,130,100 basis, and $1,763,800 LONG gain.
Non-covered surface did not become a lost basis path.
PHASE 4 — THE REVIEWABLE LINEAGE
Audit Trail connects the Schwab sale back to the prepared Morgan Stanley source lot.
Tax Alpha Dashboard makes the carryover basis visible.
The account moved. The source-lot path stayed reviewable.
WHAT STAYED REVIEWABLE
Tax Report
The Schwab sale used the prepared carryover basis: $4,130,100 basis, $1,763,800 LONG gain.
The filing-facing result did not rely on the non-covered surface alone.
Audit Trail
The sale stayed tied to the Morgan Stanley source lot through the ACATS OUT / IN path.
The account moved. The source-lot path stayed reviewable.
WHY THIS CASE MATTERS
UHNW clients move large taxable positions across custodians.
After ACATS, the sale surface may be non-covered or basis not reported.
The value is a reviewable source-lot path for a prepared reporting position.
WHAT FDL IS SHOWING HERE
FDL does not discover missing basis or repair broker records.
FDL verifies the prepared source-lot path after the transfer exists.
Non-covered surface ≠ lost basis path.
CHOOSE YOUR NEXT STEP
FDL — deterministic tax infrastructure for prepared, in-scope records.