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Understanding Your Tax Reporting Statement for Brokerage Accounts

This guide provides detailed, line-item explanations to help you understand your Fidelity brokerage statement.

Fidelity's 2014 consolidated statement consists of two parts:

  • Tax reporting statement—This form is made up of the information we report to the IRS on Forms 1099-DIV, 1099-INT, 1099-MISC, 1099-B, and 1099-OID. The titles, line and column headings, and box numbers used on this consolidated statement correspond to those on each of the stand-alone IRS forms.
  • Supplemental information—This form features additional information, not reported to the IRS, but that you may find helpful in preparing your income tax returns.

The screenshots are for illustrative purposes only. Note: certain categories of transactions may not pertain to your account as your statement is generated based on your account activity. For instance, your statement will only include a Form 1099-B and/or a Form 1099-OID, if you had any applicable 2014 transactions.


Click on the number for a detailed explanation of that section.

The following items are not illustrated on the above form but may appear on your individual form.

State/Local Tax-Exempt Income from Fidelity Funds

This section reports the amount of exempt interest dividends you received from Fidelity state-specific, tax-exempt funds that may be exempt from state and/or local income taxes, and the amount that may be taxable. For state tax-exempt information for Fidelity federal tax-exempt funds, in January or February, you will be able to see the Percentage of State Tax-Exempt Income letters on the Fidelity Fund-Specific Tax Information page.

Municipal Original Issue Discount

Municipal Original Issue Discount information for municipal bonds may be useful for updating the cost basis of any municipal bonds you may own that were originally issued at a discount to the face value of the bond. You may need to calculate your updated cost basis information, particularly if you sell your municipal bond prior to its maturity. To help make your state tax filing a little easier, we've reformatted this section so bonds are categorized by state.

Accrued Interest Paid on Purchases

Accrued interest paid when a bond purchase settles is not taxable to the buyer; instead, it is income that is taxable to the seller. Your Form 1099-INT reports the full interest payment credited to your account. You should report the full amount of interest you were paid on Form 1040, Schedule B, Interest and Dividend Income, and list the accrued interest you paid when you purchased the bond on a separate line and subtract it from your interest income subtotal.

Account Fees

This section lists the fees paid in 2014 from your account. We have listed these fees with the same descriptions that we used in your monthly/quarterly statements. Any fee amounts preceded by a minus sign indicate a fee reversal which we made in your account (including ATM fee rebates you received in your Fidelity® Cash Management Account).

Actual Payment Shortfall

Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of the actual payment shortfall incurred by your royalty trust and/or HOLDR's trust. Actual payment shortfall is the difference between the actual contingent payment and the projected contingent payment from contingent payment debt instruments. See your tax advisor for more information.

Addition to Basis

Due to the IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports your prorated share of addition to basis reported by your royalty trust and/or your HOLDR's trust. When the amount of principal reported exceeds the amount distributed to you, the difference is generally added to your cost basis.

Administrative Expense

Due to the IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports your prorated share of administrative expense incurred by your royalty trust and/or your HOLDRs trust. These expenses have not been deducted from the gross royalty income reported on forms 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.

Generic Expenses Subject to 2% Adjusted Gross Income (AGI) Limitation

Due to the IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports your prorated share of generic expenses subject to the 2% AGI limitation incurred by your royalty trust and/or HOLDRs trust. These expenses are included in the gross royalty income reported on Forms 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.

Generic Expenses Not Subject to 2% Adjusted Gross Income (AGI) Limitation

Due to the IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports your prorated share of generic expenses not subject to the 2% AGI Limitation incurred by your royalty trust and/or HOLDR's trust. These expenses are included in the gross income reported on Forms 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.

Margin Interest Paid

Margin interest paid may be deductible as an investment expense.

Proceeds Investment Expenses

Due to IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports proceeds investment expenses incurred by your unit investment commodity trust. Note: Commodity trusts do not make cash distributions. We include these expenses as negative items in this section and as separate positive line items (labeled PRINCIPAL) in the proceeds amounts reported for this security on Form 1099-B. See your tax advisor for more information.

Severance Tax

Due to the IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports your prorated share of severance tax paid by your royalty trust and/or your HOLDRs trust. Severance taxes are commonly imposed by states on the extraction of natural resources to be used out of state. We include these expenses in the royalty income reported on Forms 1099-DIV and/or 1099-MISC, because we are required to report gross income without deducting expenses. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information

Tax-Exempt Interest Investment Expenses

Due to IRS reporting requirements for widely held fixed investment trusts (WHFITs), this section reports tax-exempt interest investment expenses incurred by your unit investment trust. These expenses are not included in the investment expenses listed on Form 1099-DIV, Line 5 or on Form 1099-INT, Line 5. They are included in the tax-exempt interest amount reported (Line 8). For this reason, the reported gross tax-exempt interest amounts may be higher than the amounts that you actually received. Under certain circumstances tax-exempt interest investment expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.

eDelivery of tax statements

You may choose to stop receiving your tax statements by mail and instead receive an email notifying you when your tax statement is available for viewing online. In addition to 2014 printed statements sent by mail, online statements are now official copies of your tax forms. Contact a Fidelity Representative or your investment professional for further information about eDelivery options.

Completing Form 1040, Schedule D, and Form 8949

As in prior years, Fidelity sends customers, and the IRS on Form 1099-B, tax reporting on the gross proceeds from their brokerage account activities. Beginning with tax year 2011, Fidelity also reports on the Form 1099-B the cost basis information for covered securities. Before tax year 2011, only account owners sent cost basis and realized gain/loss information to the IRS. This change in reporting does not mitigate the customer's responsibility to accurately complete all required tax forms, including Form 8949 and/or Form 1040, Schedule D.

De minimis reporting

Fidelity continues to follow IRS rules governing de minimis reporting. According to these regulations, a customer's tax information need not be sent to the IRS, nor mailed to the customer, if the amount on each of the Forms 1099-DIV, 1099-INT, 1099-MISC, or 1099-OID is less than $10.00. This is true even for customers who received a tax statement last year, still hold the same account or securities, but had no reportable activity for this year.

However, if you had any reporting on Form 1099-B, in any amount, you will receive a complete tax statement and the regulatory information will be reported to the IRS. This is also the case if there was any reportable 2014 withholding in your account or if foreign tax was paid.

In cases where de minimis rules are in effect, your tax information will not be sent to the IRS or mailed to you. However, you can access the information online. Our de minimis forms have a de minimis watermark and label in the upper right corner. We’ll notify you by email once your form is available. To make sure we have your email address on file, please log in to your account and select “Your Profile” under the “Account Information” section.

State income tax withholding amounts reported on Forms 1099-DIV, 1099-INT, 1099-MISC, and 1099-B

As required by the IRS, if you were a resident of California, Maine, South Carolina, or Vermont during 2014 and we applied backup withholding to 2014 income and proceeds in your account, you will find this information reported on the Forms 1099-DIV, 1099-INT, 1099-MISC, and 1099-B, as applicable.

Widely held fixed investment trusts

Due to IRS reporting requirements, Fidelity has enhanced tax reporting for holders of securities known as widely held fixed investment trusts (WHFITs). Generally securities in this category include:

  • Mortgage pools (such as securities issued by agencies commonly known as Ginnie Mae, Fannie Mae, and Freddie Mac)
  • Unit investment trusts (trusts holding a specified group of stocks, bonds, options, or other assets)
  • Royalty trusts (such as trusts holding interests in properties producing gas, oil, or minerals)
  • Commodity trusts (such as certain trusts that hold precious metals)
  • HOLDRS (certain trusts which hold a specified group of stocks)

For all of these types of securities, we provide your prorated share of gross income and your prorated share of all expenses, as well as information you may need to accurately report sales and resulting realized gains and losses. For example, this means that we provide your share of all expenses incurred by the trust and your share of all income received by the trust before the trust has made any deductions for expenses. Throughout this guide, when applicable, we will describe how this information appears on your tax reporting statement.

Mortgage pool securities information

We also wish to advise holders of mortgage pool securities, such as Ginnie Mae, Fannie Mae, and Freddie Mac, that we may mail you additional account tax information in a separate Mortgage Pool Statement by March 16. Due to IRS deadlines, Fidelity does not receive this information in time to include it in your tax reporting statement. This additional mortgage pool information may make it necessary for us to also send you a corrected tax form.

Royalty trust information

Additional royalty trust tax information for shareholders, relayed to us by the trust, will be available by March 16 on the Tax Statement Guides page. You may find this information useful as you complete your tax returns.

Transferred accounts

If your account was transferred to Fidelity from another brokerage or clearing firm during 2014, your Fidelity tax statement will only include activity from the time you started conducting business with us. Your former brokerage or clearing firm should provide Forms 1099 and any other applicable tax reporting forms for 2014 activity that occurred prior to the transfer.

Employer Stock Plan Services accounts

Under new IRS cost basis regulations for 2014, brokers are no longer permitted to include compensation income in the cost basis reported on Form 1099-B for stock plan awards granted or acquired on or after 1/1/2014.

Since the Form 1099-B reported basis will no longer reflect ordinary income, a new section is being added to the Supplemental Form to provide additional stock plan lot data and compensatory income information to assist with your tax filing process.

  • What are the new IRS cost basis reporting regulations?

    The IRS began to require cost basis reporting for certain securities (covered securities) on Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, beginning with tax year 2011. As a result of these new regulations, brokerage firms (including Fidelity) are required to report most cost basis information for sales, redemptions, exchanges, etc. on Form 1099-B for securities that the IRS deems as covered by these regulations. 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 debt 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

    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.

    Furthermore, noncovered options are not reported on Form 1099-B. However, this information can be found on the Short-Term and Long-Term Realized Gain/Loss sections of the Supplemental Form.

    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 do the IRS cost basis reporting regulations impact my tax-filing responsibilities?

    These reporting changes do not mitigate the customer's responsibility to accurately complete all required tax forms, including Form 1040, Schedule D.

  • How do I determine which of the dividends reported as qualified dividends on Form 1099-DIV are eligible to be taxed at one of the lower federal long-term capital gain tax rates?

    Beginning with tax year 2013, the American Taxpayer Relief Act of 2012 permanently extends the 0% and 15% tax rates for qualified dividends for single filers with taxable incomes below $406,751 and joint filers with taxable incomes below $457,601. The top rate will permanently increase to 20% for filers with taxable incomes above these thresholds. Qualified dividends are generally dividends from domestic corporations and certain qualified foreign corporations for which the requisite holding period(s), described below, are satisfied.

    In order for the qualified dividends reported to you in Line 1b of Form 1099-DIV to be taxed at one of the lower federal long-term capital gain tax rates, you are required to have held the dividend-paying security unhedged for at least 61 days out of the 121-day period that begins 60 days before the ex-dividend date. If you did not hold the security unhedged for the requisite period, the dividends should be taxable at ordinary income tax rates. See Qualified Dividends for more information.

  • Which mutual fund dividends do not qualify for the lower tax rates?

    Mutual fund dividends attributable to (i) interest, (ii) dividends on stock issued by certain foreign companies, and (iii) dividends on stock not held by the mutual fund for the requisite holding period will not qualify for long-term capital gain tax rates at which qualified dividends are potentially taxed. All or a portion of mutual fund dividends attributable to short-term capital gains also may not qualify for long-term capital gain tax rates at which qualified dividends are potentially taxed. These dividends will likely comprise a portion of the total ordinary dividends reported in Line 1a of Form 1099-DIV. Mutual fund dividends that are reported as qualified dividends on Line 1b of Form 1099-DIV, but for which a shareholder does not satisfy the requisite holding period for the dividend-paying mutual fund (see previous question), also will not qualify for the lower long-term capital gains tax rates. See Qualified Dividends for more information.

  • What are substitute payments in lieu of dividends, and how are they taxed?

    Substitute payments in lieu of dividends may be generated where, for example, a security has been lent to a third party (such as a broker) over a dividend record date. If an investor has a margin account debit balance, securities in the account are often eligible to be lent to a broker. If the shares are lent over a record date, the investor should receive a substitute payment equivalent in amount to the dividend but taxable at ordinary income tax rates. Prior to the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), substitute payments and actual dividends were both taxed at the federal level as ordinary income. JGTRRA introduced lower federal rates for qualified dividend income; however, substitute payments are not taxed as qualified dividend income and are instead still taxed at ordinary income rates. Substitute payments in lieu of dividends are reported on Line 8 of Form 1099-MISC. See Annual Credit for Substitute Payments for additional information on Fidelity's credit adjustment for substitute payments.

  • I did not receive a separate Form 1099-MISC, reporting "Other Income," (Line 3). Where is it?

    Beginning with tax year 2013, Fidelity reports "Other Income," Form 1099-MISC, line 3 (reported separately in prior years) in your consolidated Tax Reporting Statement. Fidelity is required report Other Income to you and the IRS if, during a tax year, you received other miscellaneous income, including, among other items, credit adjustments for substitute payments received in lieu of qualified dividends, and/or certain other credits, adjustments, entertainment, gifts, gratuities, incentives, benefits, prizes, awards, or other miscellaneous income totaling at least $600. We determine your total other miscellaneous income by adding the other miscellaneous income amounts in all your accounts (under the same Taxpayer ID) for which National Financial Services LLC (NFS) is the payer. NFS is considered the payer for a number of broker-dealers, including Fidelity Brokerage Services LLC, because of the tax reporting services it performs for them.

  • How do I report "Other Income," from Form 1099-MISC, line 3, on my income tax return?

    There are many types of "Other Income," and different rules may apply depending on the type of income you receive. The amount on Form 1099-MISC, line 3, is often reported on the "Other Income" line of Form 1040, along with a description that identifies it. See IRS Publication 525, Taxable and Nontaxable Income, the instructions for your tax return, and/or consult your tax advisor for information on how items reported by NFS on Form 1099-MISC, line 3, may need to be reported on tax returns and whether any offsetting deductions can be claimed.

  • Why is the "Other Income" reported on my Form 1099-MISC less than $600?

    Only income items associated with a particular account are reported on the Form 1099-MISC issued in conjunction with that account. NFS must first aggregate items of other income received in conjunction with all accounts using the same Taxpayer ID for which it reports tax information to determine if reporting on Form 1099-MISC, line 3, "Other Income," is required. If, based on this aggregated total, reporting is required; NFS issues a separate form for each of the accounts with which individual items of income are associated, even though the amount of "Other Income" reported in conjunction with that account may be under $600.

  • My 2014 Form 1099-DIV shows mutual fund distributions that my account statement shows were not paid until January 2015. Why is there a difference between my Fidelity statements and what is reported to the IRS?

    Fidelity must adhere to IRS requirements when reporting on Forms 1099-DIV, 1099-INT, and 1099-B, which may result in differences between what is on your monthly and quarterly statements and what is reported to the IRS. For example, transactions on Form 1099-B must be reported based on the trade date even though your statements reflect sales based on the settlement date. Additionally, unlike dividends from individual securities, which are typically taxed in the year the dividends are paid, mutual fund distributions declared as payable to shareholders of record in October, November, or December and paid prior to February 1st of the following year are taxable to shareholders based on the record date, not when paid. For example, mutual fund distributions with a record date in December 2014, and paid in January 2015, are reported and taxed as 2014 dividend distributions.

  • What are the primary tax implications of investing in foreign securities or owning mutual funds that invest in foreign securities?

    Dividends and interest earned on foreign securities may be subject to withholding tax by the country from which they were paid. If you held securities that paid dividends or interest that was subject to foreign tax, Form 1099-DIV and Form 1099-INT report the gross amount of the dividends or interest (as applicable) and the amount of tax withheld at the source. You must report the gross amount of the dividend or interest on your tax return; however, you may also be able to claim a credit or deduction for the amount of tax paid to foreign countries.

    If that mutual fund holds more than 50% of its assets in foreign securities at year-end, it may elect to permit shareholders to claim a credit or deduction on their federal income tax returns for their pro-rata portion of the foreign taxes paid. If the election is made, the amount of foreign tax that you may be able to claim as a credit or deduction will be reported on Line 6 of your Form 1099-DIV and that amount will also be included in the dividend amount reported in Line 1a (and if applicable, 1b) of your Form 1099 DIV (i.e., the dividend amount will be gross of the foreign taxes). Under these circumstances, you must report the gross dividend amount on your tax return; however you may be able to deduct or receive credit for the foreign taxes. If the mutual fund is not able to, or chooses not to, elect to permit shareholders to claim a credit or deduction for their portion of the foreign taxes paid, those foreign taxes will not be reported on Line 6 of your Form 1099-DIV and will not be included in the dividend amount reported in Line 1a (or Line 1b) of your Form 1099-DIV (i.e., the dividend amount will be net of the foreign taxes). Under those circumstances, you may report that net dividend amount on your tax return but cannot otherwise deduct or receive credit for the foreign tax. For additional 2014 foreign tax credit pass-through information, in late January you will be able to see the Important Information for Individuals about Foreign Tax Paid letter on the Fidelity Mutual Fund Tax Information page. You may also want to consult your tax advisor or see IRS Publication 514, Foreign Tax Credit for Individuals (PDF).

  • I used a foreign currency to purchase a security. Now I see that I have a Supplemental Information section reporting Currency Gain/Loss. What is this section reporting?

    This section reports in U.S. dollars (USD) the estimated gain/loss on the foreign currency position that you disposed of in the security purchase. When you acquired that foreign currency position, a USD cost basis was established in that position (as described in the Currency Realized Gain/Loss section and in the footnotes on that section of your statement). Based on changes in exchange rates between that time and the time of the security purchase you experienced a gain or loss in the USD value of that foreign currency position which you realized when you used the foreign currency position to purchase the security.

  • For my unit investment trust, why are the dividend or interest amounts reported higher than the amounts that I received?

    Fidelity is required by the IRS to report gross dividends and gross interest from unit investment trusts (before expenses have been deducted). These expenses are included in the dividend and interest amounts reported on Forms 1099-DIV and 1099-INT and in their associated supplemental detail information sections. The total corresponding expenses are reported on Line 5 of Form 1099-DIV or 1099-INT. Those expenses are itemized, by security in the detail sections. Expenses, included in tax-exempt interest dividends on Form 1099-DIV or in tax-exempt interest on Form 1099-INT, if applicable, are listed separately in the supplementary Tax-Exempt Interest Investment Expense section, near the end of your tax statement. In addition, your reported gross dividends and gross interest could also include any foreign tax paid by the issuer of your security.

  • On my Form 1099-B I see an event labeled "PRINCIPAL." Please explain.

    Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), if you owned a unit investment trust (UIT), a security derived from a mortgage pool, or a real estate mortgage investment conduit (REMIC), we report your prorated share of proceeds from the sale of a security held by the trust or conduit as return of principal. We report your share of the gross proceeds, prior to making any deductions for expenses, whether or not you actually received a payment. For example, your UIT may have sold a security in order to cover redemption requests or other expenses. Since all gross income and expenses must be prorated among all unit holders, your share of such proceeds is reported, even if you did not receive any distribution. We are required to report gross return of principal, including expenses, as of the transaction date for the trust—this may often be considerably before the trust made any resulting distributions to individual trust holders.

    Note: You must generally report on Form 1040, Schedule D, all transactions reported on Form 1099-B, including return of principal. Return of principal transactions may also result in realized gain or loss. Return of principal generally reduces your basis in the affected security.

  • Do I use trade date or settlement date when determining my holding period for sales?

    The IRS requires you to use the trade date to determine your holding period. The "Date Sold or Disposed" on Form 1099-B is the trade date for each sale. Your monthly statement reports settlement date, which is the date by which payment is due.

  • Why are nondividend distributions reported to the IRS on Form 1099-DIV?

    Fidelity is required to report these distributions to you and to the IRS. Nondividend distributions generally reduce your basis in your shares (but not below zero). This becomes important when you sell your shares and need to calculate your gain or loss. However, a nondividend distribution is taxable as (and must be reported as) a capital gain to the extent that it exceeds your adjusted basis in the shares.

  • Why are interest payments or distributions from my limited partnership holding and/or my collateralized mortgage obligation (CMO) investment missing?

    If you held a limited partnership in 2014, the partnership (not Fidelity) will provide a Schedule K-1 to you. If you held a CMO in 2014, you will receive its income information in a separate Form 1099-OID from Fidelity in mid-March.

  • How are my short sales reported?

    Starting in 2011, the IRS required us to report short sales in a new way. Any short sale entered into in 2011 or later will not be reported on your 1099-B until you have closed the short sale. In most cases, your 1099-B will show the date that you closed the short sale, the acquisition date of the security used to close the short sale, and the adjusted basis of the security used to close the short sale. If you closed a short sale in 2014 that was opened prior to 2011, this transaction will not appear on your 2014 1099-B, but it will appear in the supplemental Long-Term Realized Gain/Loss section. All gains and losses resulting from closing short sale positions should be reported on Form 1040, Schedule D for the year in which the short position is closed. For more information on short sales, see IRS Publication 550, Investment Income and Expenses (PDF) or consult your tax advisor.

  • How am I taxed on nonqualified stock options (NQSOs)? I exercised and sold stock options last year, and the dollar amount seems to be reported on both my W-2 and 1099-B.

    With nonqualified stock options (NQSOs), you will generally be taxed when you exercise the stock options and when you sell the stock acquired on exercise. (NQSOs do not meet certain IRS requirements that allow for special tax treatment, such as the treatment received by Incentive Stock Options and Employee Stock Purchase Program shares.) With an NQSO, two separate tax transactions take place. First, when you exercise your option, the difference between the fair market value of the option at the time of exercise and the exercise price is treated as ordinary compensation (wages), which is reported to you on the Form W-2 you receive from your employer. Second, when you sell the stock you acquired on exercise (even if sold at the same time in an "exercise-and-sell" transaction), the difference between the cost basis of the stock (which will only include the exercise price) and the proceeds from the sale is taxable to you as a capital gain or loss. Those proceeds are reported on your 1099-B. We also provide the capital gain/loss calculated using the adjusted cost basis (which will include the exercise price and the amount included as your wage income at exercise) on the 1099 Supplemental.

    Here is a hypothetical example to demonstrate the tax treatment of: (1) exercising a nonqualified stock option with an exercise price of $1,000 when the fair market value of the stock acquired at the time of exercise is $1,400; and (2) subsequently selling the stock (acquired upon exercise) for $2,000.

    Wages (reported on W-2) Capital gains reported on Form 1099-B Capital gains reported on the 1099 Supplemental
    $1,400 fair market value $2,000 sale proceeds
    $2,000 sale proceeds
    -$1,000 exercise price -$1,000 cost basis -$1,400 cost basis*
    $400 wages reported (reported on the W2) $1,000 capital gains $600 capital gains
    *Adjusted cost basis is based on the fair market value (FMV) at the time of exercise, which is also equal to grant price plus ordinary income reported on employer W-2. If you rely instead on estimated cost-basis information provided by Fidelity, bear in mind that such information may not reflect all adjustments necessary for tax reporting purposes. The general tax rules discussed above may not apply to NQSOs that have ascertainable market value at the time of issue, have restrictions at the time of exercise, and/or have other features.
  • How am I taxed on incentive stock options (ISOs)?

    Incentive stock options (ISOs) meet IRS requirements for special tax treatment. With ISOs, you do not have to pay ordinary income taxes, Social Security tax, or Medicare taxes at the time you exercise, as long as you hold your shares at least one year from the date of exercise and two years from the grant date. If you decide to sell your shares after meeting both waiting periods, the difference between the sale price and the exercise price is taxable to you as a capital gain or capital loss. The proceeds generated upon sale are reported on your 1099-B. If you sell your shares prior to meeting the specified waiting periods, you are deemed to have entered into a disqualifying disposition of the sold shares, which means you will be required to pay ordinary income taxes generally on the difference between the fair market value at exercise and the exercise price. ISOs may have other tax consequences, as well—in particular, you may need to consider the implications under the alternative minimum tax (AMT).

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1099-DIV—Dividends and Distributions

Lists all taxable dividends, long-term capital gain distributions, nondividend distributions, and certain investment expenses, foreign tax paid, and tax-exempt interest dividends and private activity bond interest dividends (mainly from mutual funds or other regulated investment companies). The 1099-DIV information may include dividends and/or distributions from the mutual fund you use as your core money market fund. When computing any Alternative Minimum Tax (AMT) liability, see the IRS Instructions for Form 6251, Alternative Minimum Tax-Individuals (PDF), the IRS requires you to include any private activity bond interest dividends in this calculation. Dividends and capital gain distributions reported on Form 1099-DIV must be reported on your federal income tax return regardless of whether they were paid in cash or reinvested.

We report all dividends in U.S. dollars (USD). If the dividends that you received were paid in a currency other than USD, we convert the foreign currency dividend amounts into USD and report the USD equivalent on Form 1099-DIV.

The dividend amounts that we report may be higher than the amounts that you actually received. For example, if foreign tax was paid, the amount that you may be able to claim as a deduction or credit is reported in Line 6 on Form 1099-DIV and that amount is also included in the dividend amount reported in Line 1a and, if applicable, Line 1b. For this reason, the total dividends reported on the form may be higher than the amount that you actually received. Starting in early February, you will be able to find additional 2014 foreign tax credit pass-through information on the Fidelity Mutual Fund Tax Information page. IRS reporting requirements governing widely held fixed investment trusts (WHFITs) are another situation where Fidelity may report a dividend amount higher than the amount you may have received. If you owned certain unit investment trusts or HOLDRS trusts, Fidelity reports investment expenses on Line 5. We also include those expenses in the dividends reported in Line 1a, because we are required to report gross trust dividends including expenses. Because we are reporting gross dividends, the total dividends reported on the form may be higher than the amount that you actually received. The same situation may occur for tax-exempt interest dividends, reported on line 10. These expenses are not included on line 5. Instead, they are listed in the Supplemental Tax-Exempt Investment Expense section, which you may find near the end of your statement if there are appropriate expenses to report. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.

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1099–INT—Interest Income

Lists all interest earned on government and corporate debt obligations and short-term certificates of deposit, as well as interest earned from cash in your account.

As part of the 2014 Cost Basis Legislation (CBL) changes, there are two new fields on the Form 1099-INT, Line 10 Market Discount and Line 11 Bond Premium. For debt issued at par, market discount is the difference between the instrument’s stated redemption price and the purchase price. There is a taxpayer election that allows you to choose whether you want to recognize the discount at disposition (sale or redemption), or alternatively to calculate accretion daily. The default setting is to recognize the discount at disposition. If you elect to calculate accretion daily, the market discount would appear on Form 1099-INT in line 10. Bond Premium is the amount paid above a debt instrument’s par value. There is a taxpayer election that allows you to choose whether you want to amortize the premium for corporate bonds. The default setting is to amortize, for which the amortized amount would appear on Form 1099-INT line 11.

Line 8 reports tax-exempt interest from individual securities, but not from mutual funds or other regulated investment companies. We report those tax-exempt interest dividends on Form 1099-DIV, as described above. In addition to your federal tax return, you may also be required to report this information on your state income tax return.

Line 9 reports any applicable specified private activity bond interest. Specified private activity bond interest must be taken into account in computing federal Alternative Minimum Tax (AMT). The tax-exempt interest reported on Line 8 includes this specified private activity bond interest, if any. For more information, see the IRS Instructions for Form 6251, Alternative Minimum Tax–Individuals. In addition to federal reporting, Fidelity may be required to report all or a portion of your total exempt income to California, Connecticut, Minnesota, or New York state tax authorities.

Line 12 shows CUSIP numbers for tax-exempt securities on which tax-exempt interest was paid to you during the calendar year and reported on Line 8. In cases in which we are reporting tax-exempt interest from more than one CUSIP, the line is marked, "various."

Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), for certain unit investment trusts or mortgage-backed securities distributing taxable interest, Fidelity reports your prorated share of investment expenses in Line 5. Those expenses are also included in the interest reported in Line 1 because we are required to report your share of any unit investment trust or mortgage-backed security gross interest before expenses were subtracted. For this reason, the interest reported on the form may be higher than the amount that you actually received. In the same manner, we also include your prorated share of tax-exempt interest investment expenses in the amount reported in tax-exempt interest on Line 8. We provide details on those expenses in the Tax-Exempt Interest Investment Expenses section (shown if applicable) near the end of the supplemental section of your tax statement. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.

We report all interest in U.S. dollars (USD). If the interest that you received was paid in a currency other than USD, we convert the foreign currency interest into USD and report the USD-equivalent on Form 1099-INT.

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1099–MISC—Miscellaneous Income

Lists other reportable income, such as royalty payments from grantor trusts, other income, and substitute payments made in lieu of dividends. Royalty payments are generally reported on your federal income tax return, Form 1040, Schedule E.

Other Income includes credit adjustments for substitute payments in lieu of qualified dividends, or certain credits, adjustments, or other income. Following IRS regulations, Fidelity reports Other Income if you received other miscellaneous income totaling at least $600 during the tax year. We determine your total other income by adding together the other miscellaneous income amounts in all of your accounts (under the same Taxpayer ID) for which National Financial Services LLC (NFS) is the payer. NFS is considered the payer for a number of broker-dealers, including Fidelity Brokerage Services LLC, because of the tax reporting services it performs for them. Beginning with 2013 we reported Line 3, Other Income, on this consolidated Tax Reporting Statement. See the FAQ in this guide, "I did not receive a separate Form 1099-MISC, reporting 'Other Income,' (Line 3). Where is it?"

Substitute payments in lieu of dividends are generally reported on the "other income" line of your federal income tax return, Form 1040, and should be taxed at ordinary federal income tax rates. See Annual Credit for Substitute Payments for additional information on credit adjustments paid by Fidelity for substitute payments in lieu of qualified dividends. Due to IRS reporting requirements governing widely held fixed investment trusts, if you owned certain royalty or HOLDRS trusts, Fidelity reports various expenses, as well as adjustments which affect the estimated cost basis of your shares, in the applicable supplemental sections of your tax statement. We also include your pro-rated share of those expenses in the royalties (Line 2) reported in the 1099-MISC, because we are required to report your royalties before expenses were subtracted. For this reason, Fidelity may report a higher amount of royalties than the amount that you actually received. Investment expenses may be deductible, subject to applicable limitations. In addition, by March 16, if you owned a royalty trust, Fidelity may post online additional information relayed to us by the royalty trust. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.

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Summary of Proceeds from Broker and Barter Exchange Transactions

Lists gross proceeds less commissions from sales. Beginning January 1, 2014, gross proceeds will also be adjusted for option premiums from option contracts purchased and subsequently closed after that date.

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Summary of Original Issue Discount

Lists total original issue discount.

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1099–B—Proceeds from Broker and Barter Exchange Transactions

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 2014. Additionally, the proceeds of all covered option contracts purchased after 12/31/2013 will be listed on Form 1099-B. 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 ). Help Completing Your 2013 Form 1040, Schedule D may assist you as you prepare your tax return.

2014 update on cost basis reporting to the IRS

As part of the 2014 Cost Basis Legislation (CBL) changes, the IRS provided further details on cost basis reporting for fixed-income securities and options. As a result, equity and covered index options (also known as Section 1256 options contracts) are now required to be reported on Form 199-B. For these option contracts, we provide a summary of activity, instead of a detailed list of transactions, in a separate section on Form 1099-B.

Covered securities

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

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*

Because less complex debt is now eligible to be considered “covered”, market discount (when recognized at disposition) is now reported on Form 1099-B. This information is displayed in columns 1f Code, and 1g Adjustments. If your transaction has either market discount or wash sale amounts to report, then column 1f will be populated with either a D = Market Discount or W = Wash Sale. The amount of the market discount or wash sale will be shown in column 1g Adjustment.

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 six different sections: short-term covered, short-term noncovered, long-term covered, long-term noncovered, a section for transactions whose basis is not reported to the IRS and whose term is unknown, and a new section called Section 1256 Option Contracts.

Fidelity has provided most of this cost basis information to customers for many years. It is the requirement that we also report 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 of Property, Stock or Other Symbol (1a)
  • Date Sold or Disposed (1c)
  • Proceeds (1d)
  • Federal Income Tax Withheld (4).

Note that the numbers following each category are equivalent to the ones on the stand-alone IRS Form 1099-B.

The cost basis information that we provide to the IRS, when applicable, includes:

  • Date Acquired (1b)
  • The holding period of the security that you sold (short-term, long-term or unknown) (2)
  • Cost or Other Basis (1e)
  • Wash Sale or Market Discount (1f and 1g)
  • Basis is reported to the IRS (3 or 5).

The supplemental realized gain/loss sections in your 2014 tax statement continue to provide additional cost basis information for complex debt, for noncovered option contracts, 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 dispositions (i.e. sales, redemptions) of various kinds of securities:

Type of security Location of cost basis information in your tax statement
  • Equities
  • Mutual funds and other securities in dividend reinvestment plans
  • Less complex debt
  • Short sales opened in 2011–2014 and closed during 2014
  • Covered option contracts
1099-B only
  • Foreign equities
  • Foreign Fixed-income securities
  • Complex debt
1099-B
Additional information is also provided in the Realized Gain/Loss sections of the supplemental pages
  • Noncovered option contracts
  • Short sales, opened prior to 2011
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 2014 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 receive a return of principal payment, listed on your 2014 Form 1099-B, in January or February 2015. 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.

Foreign securities

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.

*Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for tax purposes. Taxpayers should verify such information when calculating reportable gain or loss. Fidelity specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, Fidelity determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.
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1099–OID—Original Issue Discount

Lists the Original Issue Discount (OID) that you must report for the current year. OID reports the earned portion of the difference between the stated redemption price at maturity (if greater than one year) and the issue price of a bond, debenture, note, or other evidence of indebtedness issued at a discount (e.g., zero-coupon bond, long-term CD) that is attributable to the selected tax year. OID on Treasury obligations, listed in Column 8, is exempt from state and local income taxes. If you hold collateralized debt obligations (CDO), which include real estate mortgage investment conduits (REMIC) and collateralized mortgage obligations (CMO), you may receive a separate 1099-OID form in March to report this OID. You may need to make certain adjustments to this information. Consult your tax advisor or see IRS Publication 1212 Guide to Original Issue Discount (OID) Instruments (PDF) for more specific reporting information.

As part of the 2014 Cost Basis Legislation (CBL) changes, there are two new fields on Form 1099-OID: Market Discount (5), and Acquisition Premium(6). For OID bonds, market discount is the difference between the adjusted issue price and the purchase price. The default setting is to recognize this discount at the time of disposition, and report the discount on Form 1099-B. If you elect to have current inclusion, or to calculate accretion daily, then the market discount would be reported on Form 1099-OID (only available for taxable bonds). Acquisition premium is the amount paid above a debt instrument's adjusted issue price for taxable bonds. The amortization of this premium is calculated daily, and reported on Form 1099-OID, unless you elect not to amortize.

Additionally, Form 1099-OID features supplemental OID information that was previously reported on a separate section of this tax package. This information includes Begin Date, Days Held, OID Rate, and Face Amount, which can help you understand how your OID amount was calculated.

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Details of 1099-DIV Transactions

The Details of 1099-DIV Transactions section is divided into three subsections: Total Ordinary Dividends and Distributions Detail; Total Capital Gains Distributions Detail; and Other Distributions, Tax, and Expense Details. Each of these subsections appear only if they apply to the transactions reported on your 1099-DIV.

We identify the short-term capital gain distributions portion of ordinary dividend distributions in this section. Generally, short-term capital gain distributions are nonqualified dividends, and as such, are taxed as ordinary income. However, a portion of the short-term capital gain distribution may be a qualified dividend and subject to one of the lower federal long-term capital gain tax rates. Any portion of the short-term capital gain distribution that is potentially subject to one of the lower tax rates is included as qualified dividends in Line 1b.

The 2014 Percentage of Income from U.S. Government securities letter for applicable Fidelity Funds will be available in January or February in Fidelity's Tax Center. You may find this letter useful if you received dividends from Fidelity Funds that received income from U.S. Government securities.

Form 1099-DIV provides tax-exempt interest dividend and specified private activity bond interest dividend amounts (mainly from mutual funds or other regulated investment companies) on lines 10 and 11. For state tax-exempt information for Fidelity federal tax-exempt funds, in January or February you will be able to see the Percentage of State Tax-Exempt Income letters on the Fidelity Fund-Specific Tax Information page.

Any reported foreign tax paid on Line 6 is also included in the dividends reported on Line 1a and, if applicable, Line 1b. For mutual funds, you will see such individual foreign tax entries (Line 6) as part or all of certain matching individual entries for Lines 1a and 1b. For individual securities we do not give such a payment-by-payment accounting. For additional 2014 foreign tax credit pass-through information for Fidelity mutual funds, in January or February you will be able to see the Important Information for Individuals about Foreign Tax Paid letter on the Fidelity Fund-Specific Tax Information page.

Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs) the dividend amounts that we report for these securities may be higher than the amounts that you actually received. In each case this is due to the requirement that we report gross dividends before any expenses have been deducted. For WHFITs, dividends are reported as of the declaration date, not the distribution date.

Undistributed income from a unit investment trust (UIT)

You may find a 12/31 reporting item from your UIT, listed for Lines 1 and/or 2, which is income undistributed by your trust. Due to IRS reporting requirements, we report this income, even if it was undistributed. Once distributed in the following year, this income will be reported as a positive amount (since you have now received a distribution) and a negative amount (since it was previously listed as an undistributed distribution), thereby avoiding reporting the same distribution twice.

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Total Capital Gains Distributions Detail

Total Capital Gain Distributions (2a) may include, if applicable Unrecaptured Section 1250 Gain (2b), Section 1202 (28%) Gain (2c), and Gains from Collectibles (28%) (2d). The portion of Capital Gain Distributions subject to 15% Rate Gain is equal to (2a) less amounts shown in columns (2b) through (2d). There is also a separate column, listing these 15% rate gain details in this section.

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Other Distributions, Tax and Expense Detail

Non-dividend distributions, state tax withholding information (applicable this year to a small number of California, Maine, South Carolina, and Vermont residents only), as well as investment expense details and employer-sponsored stock plan liquidation distribution information are all listed in this section.

The amount of any non-dividend distributions (column 3) you received generally reduces the basis for the applicable security by the same amount of the distribution.

If you owned certain unit investment trusts, or HOLDRS trusts, Fidelity reports the investment expense details for expenses reported on Line 5. We also include those expenses in the dividends that we report. For this reason, the total reported gross dividends may be higher than the amount that you actually received. Investment expenses are generally deductible, subject to applicable limitations. Tax-exempt interest dividend details, reported in column 10, are not included in line 5. Instead, they are listed in the Supplemental Tax-Exempt Investment Expense section which you may find near the end of your statement if there are appropriate expenses to report.

For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.

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Details of 1099-INT Transactions

We present Interest Income details in three subsections: Interest Income Details, Tax-Exempt Obligations; Interest Income Details, Taxable Obligations; and Interest Income Details, Investment Expenses and Withholding. Each of these subsections appear only if they apply to the amounts reported on your 1099-INT.

Interest Income Details, Tax-Exempt Obligations

We show Tax-Exempt Interest (8) and Specified Private Activity Bond Interest (9), as well as the following fields for the tax-exempt obligations: Bond Premium (11), Noncovered Bond Premium, Market Discount (10), and Noncovered Market Discount. Generally Specified Private Activity Bond Interest must be included in the calculation of Alternative Minimum Tax (AMT). To help make your state tax filing a little easier, we have reformatted this section so tax-exempt bonds are now categorized by state.

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Interest Income Details, Taxable Obligations

We show Interest Income (1), Interest on U.S. Savings Bonds and Treasury Obligations (3) in this subsection, as well as the following fields for taxable obligations: Bond Premium (11), Noncovered Bond Premium, Market Discount (10), and Noncovered Market Discount.

IRS reporting requirements governing widely held fixed investment trusts (WHFITs)

Due to the WHFIT requirements, we must generally report income based upon the date it is received by the trust and expenses as they are incurred by the trust. Here are some of the reporting consequences:

Undistributed income from a unit investment trust (UIT)—If your UIT had undistributed 2014 income, you may find it listed as a 12/31 distribution for column 1. We report this income, even though it is undistributed. Once distributed in the following year, this income will be reported on next year's tax statement as a positive amount (since you received a distribution) and a negative amount (since it was listed on this year's tax statement as an undistributed distribution), thereby avoiding reporting the same distribution twice. Interest income from mortgage-backed securities—Following the IRS reporting requirements, we report income from mortgage-backed securities based on the record date rather than on any subsequent distribution date. As a result you may find interest, distributed by your mortgage-backed security in January or February 2015, reported as 2014 income. We list such interest in the details for column 1, dated 12/31.

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Interest Income Details, Investment Expenses and Withholding

We show the following fields in this section for both tax-exempt and taxable obligations: Federal Income Tax Withheld (4), Investment Expenses (5), Foreign Tax Paid (6), and State Tax Withheld (13-15).

Investment expenses (5)—If you owned certain unit investment trusts or mortgage-backed securities, Fidelity details the investment expenses reported in column 5. We also incorporate those expenses into the detail interest entries for column 1 of the 1099-INT, because we are required to report unit investment trust interest before expenses have been deducted. For this reason, the reported gross interest amounts may be higher than the amounts that you actually received. In the same manner, we also incorporate your prorated share of tax-exempt interest investment expenses in detail entries for tax-exempt interest (column 8). Tax-exempt interest dividend expenses are not included in Investment Expenses (column 5). Instead, they are listed in the Supplemental Tax-Exempt Investment Expense section which you'll find near the end of your statement if there are appropriate expenses to report.

For more information, see IRS Publication 550, Investment Income and Expenses (PDF) or consult your tax advisor.

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Details of 1099-MISC Transactions

Substitute payments have been separated into two categories: those that are potentially eligible for a credit adjustment and those that are not. In early March 2015, or soon thereafter when all reclassification information is available, Fidelity expects to provide eligible customers* with a credit adjustment for substitute payments received in lieu of qualified dividends during the 2014 tax year. See Annual Credit for Substitute Payments for more information on Fidelity's credit adjustment for substitute payments in lieu of dividends, including how the credit is calculated.

You should include any credit adjustments you received in 2014 for substitute payments in lieu of qualified dividends received during the 2013 tax year in your income for 2014. We now include Form 1099-MISC, column 3, "Other Income", previously reported in a separate statement, in this consolidated Tax Reporting Statement. Column 3 includes these adjustments, only if the total of all other income reportable to you on that column reaches the reporting threshold for that form. You may, therefore, need to consult your account statements to determine the credit adjustment amount, if any, to report on your tax return. The annual credit adjustment program is not guaranteed to remain in effect indefinitely. Fidelity reserves the right to amend or terminate the program.

Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), if you owned certain royalty or HOLDRS trusts, Fidelity reports various expenses, as well as adjustments which affect the estimated cost basis of your shares, in the applicable supplemental sections of your tax statement. We also include your pro-rated share of each of those expenses as separate items listed as royalty income (column 2) entries. The regulations require us to report your royalties before subtracting expenses. For this reason, the total royalty amounts reported on the form may be greater than the amount that you actually received. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF) or consult your tax advisor. In addition, by March 16, additional royalty trust tax information for shareholders will be available on the Tax Statement Guides page.

*You may be eligible for the credit adjustment with respect to a substitute payment in lieu of dividends on a security on loan if (1) you are a U.S. person (including U.S. citizens and resident aliens), (2) you received the substitute payment in an account registered as an individual, joint, trust, estate, or "pass-through" entity type (partnership, LLC, LLP, etc.), (3) the account is open at the time the credit adjustment is made, and (4) you would have been eligible to treat (and report to the IRS) the dividend paid on the security on loan as a qualified dividend had the security not been on loan and had you received the dividend paid on that security rather than the substitute payment in lieu of the dividend. (You will generally satisfy this condition if the applicable security is from a domestic corporation or a qualified foreign corporation, and you would have held the security unhedged for the requisite holding period for qualified dividend treatment.) Generally, qualified dividends are those paid on shares of domestic corporations and certain eligible foreign corporations, as long as the shares are held unhedged for the requisite period of time. Fidelity reserves the right to deny the credit adjustment to any customer who Fidelity determines will be ineligible to receive the tax benefit of the reduced qualified-dividend tax rate and to amend the eligibility terms of the program.
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Short-Term Realized Gain/Loss

Due to IRS cost basis reporting rules, certain aspects of Fidelity's cost basis reporting changed beginning with tax year 2011.

Here is a summary of where you will find realized gain/loss transaction information for various kinds of securities.

Type of security Location of cost basis information in your tax statement
  • Equities
  • Mutual funds and other securities in dividend reinvestment plans
  • Less complex debt
  • Short sales opened in 2011–2014 and closed during 2014
  • Covered option contracts
1099-B only
  • Foreign equities
  • Foreign fixed-income securities
  • Complex debt
1099-B
Additional information is also provided in the Realized Gain/Loss sections of the supplemental pages
  • Noncovered option contracts
  • Short sales, opened prior to 2011 and closed in 2014
  • Foreign currency transactions
Realized Gain/Loss sections only

The Short-Term Realized Gain/Loss section provides information that may be helpful when completing Form 8949 and/or Form 1040, Schedule D. If this section appears on your report, refer to Help Completing Your 2013 Form 1040, Schedule D for more information.

If you purchased a security in a foreign currency, then following its sale or disposition, this section provides both the cost in that currency and the estimated United States dollar (USD) cost basis* in the "Cost Basis" column (determined based on the USD equivalent of the foreign currency cost as of the trade date of purchase). If you sold a security in a foreign currency, this section provides both the foreign currency proceeds and the USD equivalent of those foreign currency proceeds (as of the trade date of the sale) in the “Proceeds” column. See the footnotes on this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions.

Note that if you sold or otherwise disposed of a debt instrument that is denominated in a currency other than USD or that makes a payment calculated by reference to the value of a currency other than USD, certain tax rules may require you to treat as ordinary income/loss all or a portion of your realized gain/loss.

Consult your tax advisor for more information regarding reporting of transactions made in a foreign currency.

Extraordinary dividends

In general, an extraordinary dividend is a dividend which exceeds 10% of your tax basis in your stock. If you received a dividend deemed as an extraordinary dividend on stock held in your account, subsequent losses realized on the sale of such stock may be treated as long-term capital losses to the extent of the extraordinary dividend regardless of how long you held the stock. If you believe you received an extraordinary dividend, you may want to consult with your tax advisor or see IRS Publication 550, Investment Income and Expenses (PDF).

* Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. Fidelity specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, Fidelity determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.
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Details of 1099-OID Transactions

Securities in the Original Issue Discount details section marked with an (A) in the "Total" column report the actual accrual information based on the purchase price of the non--real estate mortgage investment conduits (REMIC) securities. For all other securities, Fidelity uses the default from IRS Publication 1212, Guide to Original Issue Discount Instruments (PDF) to estimate the accrual amount.

If you hold collateralized debt obligations (CDO), which include real estate mortgage investment conduits (REMIC) and collateralized mortgage obligations (CMO), you may receive a separate 1099-OID form in March to report this OID. You may need to make certain adjustments to this information. Consult your tax advisor or see IRS Publication 1212, Guide to Original Issue Discount Instruments (PDF) for more specific reporting information.

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Long-Term Realized Gain/Loss

Due to IRS cost basis reporting rules, certain aspects of Fidelity's cost basis reporting have changed, beginning with tax year 2011.

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
  • Equities
  • Mutual funds and other securities in dividend reinvestment plans
  • Less complex debt
  • Short sales opened in 2011–2014 and closed during 2014
  • Covered option contracts
1099-B only
  • Foreign equities
  • Foreign fixed-income securities
  • Complex debt
1099-B
Additional information is also provided in the Realized Gain/Loss sections of the supplemental pages
  • Noncovered option contracts
  • Short sales, opened prior to 2011 and closed in 2014
  • Foreign currency transactions
Realized Gain/Loss sections only

The Long-Term Realized Gain/Loss section provides information that may be helpful when completing Form 1040, Schedule D. If this section appears on your report, refer to Help Completing Your 2013 Form 1040, Schedule D for more information.

If you purchased a security in a foreign currency, then following its sale or disposition, this section provides both the cost in that currency and the estimated U.S. dollar (USD) cost basis* in the "Cost Basis" column (determined based on the USD equivalent of the foreign currency cost as of the trade date of purchase). If you sold a security in a foreign currency, this section provides both the foreign currency proceeds and the USD equivalent of those foreign currency proceeds (as of the trade date of the sale) in the "Proceeds" column. See the footnotes on this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions.

Note that if you sold or otherwise disposed of a debt instrument that is denominated in a currency other than USD or that makes a payment calculated by reference to the value of a currency other than USD, certain tax rules may require you to treat as ordinary income/loss all or a portion of your realized gain/loss.

Consult your tax advisor for more information regarding reporting of transactions made in a foreign currency.

Extraordinary dividends

In general, an extraordinary dividend is a dividend which exceeds 10% of your tax basis in your stock. If you received a dividend deemed as an extraordinary dividend on stock held in your account, subsequent losses realized on the sale of such stock may be treated as long-term capital losses to the extent of the extraordinary dividend regardless of how long you held the stock. If you believe you received an extraordinary dividend, you may want to consult with your tax advisor or see IRS Publication 550, Investment Income and Expenses (PDF).

*Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. Fidelity specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, Fidelity determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.
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Currency Realized Gain/Loss

This section of your statement provides information regarding certain transactions in which a customer disposes of foreign currency, namely exchanges of foreign currency for U.S. dollars (USD), exchanges of foreign currency for a security, and exchanges of foreign currency for a different foreign currency. It provides estimated cost basis*, proceeds, and gain/loss information for the currency disposed of in any of the foregoing transactions. Under certain tax rules, gain/loss realized on these types of transactions may be treated as ordinary income/loss

If you originally acquired the foreign currency in exchange for USD, then the estimated cost basis we provided in this section is generally that USD purchase price. If you originally acquired the foreign currency in exchange for another foreign currency, then we determined the estimated cost basis by converting the foreign currency purchase price into USD based on exchange rates on the trade date of the purchase. If you originally acquired the foreign currency in another type of taxable transaction (e.g., as proceeds from the sale of the security or as a dividend), then we determined the estimated cost basis by converting the foreign currency into USD based on exchange rates on the date of that earlier transaction.

If you sold the currency in exchange for USD, then the proceeds in this section are those USD proceeds. If you used the foreign currency to purchase a security or another foreign currency, then we determined the proceeds by converting the disposed currency into USD based on exchange rates on the trade date of that transaction. For tax reporting purposes, you may be required to determine your actual USD cost basis, proceeds, and gain/loss based on the exchange rates on the settlement dates of the applicable transactions. Gains or losses from these types of currency transactions are generally reportable as ordinary income on Form 1040.

See the footnotes on this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions.

* Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. Fidelity specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, Fidelity determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.
Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation
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