WHAT IS A CONFIRMATION?

Brokerage firms and investment companies are required by the National Association of Securities Dealers (NASD) to provide investors with a financial disclosure before purchasing securities on their behalf.  This disclosure, which summarizes the requested trade, is called a confirmation notice.  Confirmation notices are usually sent before and after a trade is executed. The original price you pay for an asset when you buy it is called its basis.  A security's basis is used to determine your gain or loss on your trade.  The difference between what you receive for the asset when you sell it and its basis (minus depreciation deductions and plus capital improvements) is your gain or loss.

Confirmation notices are very important because they provide you with evidence of your basis for tax purposes.  You should hold onto your confirmation notices to help you file your taxes.

Now let's look at the basic makeup of a confirmation notice.