How soon must a broker-dealer be notified about specific shares sold for tax purposes?

A broker-dealer must be notified within three business days about specific shares sold for tax purposes because this timeline ensures compliance with SEC reporting requirements. This period allows for adequate processing of trade information and aligns with the settlement cycle for securities transactions, which is typically two business days for most trades. By receiving timely notifications within this window, broker-dealers can accurately report gains or losses, which are critical for tax calculations. This timeframe also protects investors by ensuring that any tax implications are recorded promptly and correctly, thereby maintaining transparency and regulatory compliance in the trading process.