Form 1099-B lists all proceeds from the sale or other disposition of stocks, bonds, mutual funds; subscription rights expiring with a cash equivalent, taxable tenders and mergers; and short sales if opened no earlier than 2011 and closed in 2013. We report all transactions on a trade-date basis and they are the net amount after commissions. The cost basis reported reflects certain adjustments, if applicable. You may be required to make additional adjustments to properly calculate your taxable gain/loss. We are required to report most 1099-B information to you and the IRS.
To complete your federal income tax return, you are required to provide the cost basis for shares you sold in the past year in order to determine your realized gain or loss. Lower tax rates (20%, 15%, or, for those taxpayers in the two lowest tax brackets, 0%) apply to any long-term capital gains realized on the sale or redemption of securities (including the exchange of mutual fund shares). In general customers must report the information from Form 1099-B by completing Form 8949 (PDF) and/or Form 1040, Schedule D (PDF). Help Completing Your 2013 Form 1040, Schedule D may assist you as you prepare your tax return.
2013 update on cost basis reporting to the IRS
The IRS provided financial institutions with further details concerning their cost basis reporting responsibilities for "covered securities" during and following the multiyear implementation period which began in 2011. They recently provided cost basis reporting details for fixed-income securities and for options.
Generally, the regulations define covered securities as:
- 2011 – Stock in a corporation purchased on or after January 1, 2011 (not including stocks eligible for average basis)
- 2012 – Shares of registered investment companies, including open-end mutual funds, and stocks acquired in dividend reinvestment plans (DRIPs), purchased on or after January 1, 2012
- 2014 – Less complex debt securities that have a single fixed payment schedule as well as a maturity date, and were acquired on or after January 1, 2014. Equity options and Section 1256 options, as defined by the IRS, also qualify as covered securities as of the same acquisition date.
- 2015 – Transfer statement reporting (for example, when you move your account from one firm to another) begins for all equity options and less complex fixed income securities.
- 2016 – Complex debt instruments (acquired on or after January 1, 2016), including those with more than one stated rate of interest, convertible debt, stripped bonds or stripped coupons, non-dollar denominated debt, tax credit bonds, debt with a payment in kind (PIK) feature, foreign debt issued by a non-U.S. issuer, contingent payment debt, and inflation-indexed debt.
- 2017 – Transfer statement reporting by brokers begins for all complex debt issues that are covered as of January 1, 2016.
Noncovered securities include the types of securities, described above, whose acquisition and/or disposition dates are older than the applicable dates for covered securities. When the information is available in our records, Fidelity also provides cost basis information for sales, redemptions, and exchanges of noncovered securities in separate sections of Form 1099-B. However, we do not report this cost basis information to the IRS.
The following securities are classified as noncovered:
- Short-term debt (maturity of less than 366 days)
- Real estate mortgage investment conduits (REMICs)
- Securities from the Federal National Mortgage Association and the Government National Mortgage Association (Freddy Macs and Ginny Maes)
How Fidelity reports covered and noncovered shares on Form 1099-B*
In order to facilitate completing Form 8949 and/or Schedule D, your Form 1099-B presents information in an order similar to the 8949/Schedule D order. Form 1099-B also presents information in as many as five different sections: short-term covered, short-term noncovered, long-term covered, long-term noncovered, and a section for transactions whose basis is not reported the IRS and whose term is unknown.
Fidelity has provided most of this cost basis information to customers for many years. It is the requirement that we also convey cost basis information to the IRS that is at the heart of the changes to Form 1099-B. Prior to 2011, Fidelity provided cost basis information in the Supplemental Realized Gain/Loss Sections of the Tax Reporting Statement. Beginning with tax year 2011, we moved most of this information to Form 1099-B.
For every transaction reported on the 1099-B (whether concerning a covered or noncovered security), Fidelity reports the following information to the IRS:
- Description (8)
- Date of Sale or Exchange (1a)
- Sales Price (2a)
- Federal Income Tax Withheld (4).
Note that the numbers following each category correspond to the equivalent box numbers on the stand-alone IRS Form 1099-B.
The cost basis information that we provide to the IRS, when applicable, includes
- Date of Acquisition (1b)
- The holding period of the security that you sold (short-term, long-term or unknown) (1c)
- Cost Basis (3)
- Wash Sale Loss Disallowed (5)
- Basis is reported to the IRS (6)
The supplemental realized gain/loss sections in your 2013 tax statement continue to provide additional cost basis information for fixed income securities purchased either above or below par, for options transactions, and for security transactions conducted in a currency other than U.S. dollars.
Generally, as you complete your tax returns, you must report all transactions from Form 1099-B and any other transactions including those listed on the Supplemental Realized Gain/Loss sections of the tax statement, whether for covered or non-covered securities.
Here is a summary of where you will find transaction information for various kinds of securities.
|Type of security
||Location of cost basis information in your tax statement
- Mutual funds and other securities in dividend reinvestment plans
- Fixed-income securities without adjustments
- Short sales opened in 2011–2013 and closed during 2013
- Foreign equities
- Foreign Fixed-income securities
- Domestic Fixed-income securities with cost basis adjustments
Additional information is also provided in the Realized Gain/Loss sections of the supplemental pages
- Short sales, opened prior to 2011 and closed in 2013
- Foreign currency transactions
|Supplemental Realized Gain/Loss sections only
Mutual funds and other securities in dividend reinvestment plans (DRIPs)—bifurcation of information
Fidelity reports cost basis on the 1099-B to you and the IRS (for covered shares only) using the average cost method, unless you specified another applicable method prior to trade settlement.
Positions, using the average cost calculation method, that include both noncovered and covered shares are considered bifurcated. As such, these positions comprise the following:
- Shares acquired prior to January 1, 2012
- Additional share purchases that occur on or after January 1, 2012, of the same mutual fund
For mutual fund positions that are considered bifurcated
- The average cost basis for covered and noncovered lots is calculated separately.
- Fidelity only reports cost basis for covered lots to the IRS. It does not report cost basis for noncovered lots to the IRS. See Help Completing Your 2013 Form 1040, Schedule D for more information about bifurcation.
Reporting short sales
Beginning with tax year 2011, the new IRS cost basis reporting rules require us to report on Form 1099-B all short sales in the year in which the short sale is closed. Before tax year 2011, we were also required to report short sales on Form 1099-B, but only when they were opened. Short sales opened prior to 2011 and closed in 2013 are an exception to this rule. Those transactions are reported instead in the Supplemental Realized Gain/Loss sections of your tax statement. In this way, we avoid reporting the same short sale twice to the IRS. The IRS generally requires shareholders to report all short sales in the year that the short sale is closed —this is not a change from prior years.
Widely held fixed investment trusts (WHFITs) reporting—return of principal
Due to IRS reporting requirements governing WHFITs, we report your prorated share of the sales proceeds from the portfolios of unit investment trusts, securities derived from mortgage pools, or real estate investment conduits (REMICs) as return of principal on Form 1099-B (reported as PRINCIPAL on the form). We report your share of return of principal, whether or not you actually received a payment, because we report gross return of principal before any expenses were deducted. These reported proceeds may not match any distributions that you may have received during the year. Furthermore, for WHFIT securities, due to "receipt-based" reporting rules, your trust is required to report your prorated share of sales proceeds as of the date that they were sold by the trust and your prorated share of expenses as of the date on which they were incurred by the trust-not on the date any such sales proceeds are distributed to shareholders. This means that you may only have received a return of principal payment, listed on your 2013 Form 1099-B, in January or February 2014. You must generally report return of principal on Form 8949 and/or Schedule D in order to match our reporting to the IRS on Form 1099-B. In addition, you should generally reduce your security's basis by the amount of the return of principal. Fidelity includes return of principal in our calculation of your estimated cost basis. If your basis is reduced to zero, any additional return of principal should also be reported as a short-term or a long-term gain, depending upon how long you have owned the security.
We report all proceeds in U.S. dollars (USD) on Form 1099-B. If the proceeds that you received from a transaction were paid in a currency other than USD, we convert those foreign currency proceeds into USD based on exchange rates on the trade date of the transaction and report those USD-equivalent proceeds on Form 1099-B. We provide additional information regarding such transactions in the Realized Gain/Loss sections of the Supplemental Information pages of this statement.