The new cost basis legislation means some changes to the 1099 Composites you will receive from your custodians in late January. The most notable change is the revised 1099-B, which now displays cost basis information, including: the date of acquisition, the adjusted cost basis, disallowed wash sale losses, covered and uncovered securities status, as well as the specific holding period indicating your total short and long term gains and losses.
Also included in the Form 1099 Composite this year is a newly revised Year-End Summary Report (for Charles Schwab accounts) or a Supplemental Information Report (for Fidelity accounts). These additional summary reports provide a consolidated view of the realized gains and losses, the cost basis summary and the wash sale data for the tax year 2011. A summary of fees and expenses has also been added to help you identify the total management fees debited from your account(s).
This new format now consolidates all of your tax information into one easy and convenient report, making the headache of tax preparation much easier for yourself and your tax preparer. For tax year 2011, the cost basis information is being provided to you for informational purposes only and will not be reported to the IRS. However, cost basis information on mutual funds and ETFs purchased on or after January 1, 2012 will be reported directly to the IRS on an annual basis beginning with the tax year 2012.
If you have questions, please consult with your tax preparer or refer to these guides from Charles Schwab and Fidelity. Additionally, some custodians provide tax information electronically, so you don’t have to wait for the hard copy to arrive in the mail. If you have not already selected that option for your account(s), you may do so by accessing your account online or, if you’re a Merriman client, by calling your Merriman Client Service team at 1-800-423-4893.