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Understanding Your 2014 Fidelity Informational Tax Reporting Statement for Mutual Fund Accounts

Fidelity prepares Informational Tax Reporting Statements for corporate and non-prototype accounts that are generally exempt from IRS Form 1099 reporting. This guide provides detailed information to help you understand your Informational Tax Reporting Statement.

While Fidelity does not generally send information reported on your Informational Tax Reporting Statement to the IRS, we are required to report any regulatory (1099) account information. In this case, we send a 1099 Tax Reporting Statement to you and the data to the IRS. For S corporations, this includes proceeds and other Form 1099-B information, which, prior to 2012, was not reportable. As was the case last year, on your Informational Tax Reporting Statement we include information also reported on a 1099 Tax Statement, as well as your non-reportable information for the same account(s).

If you are required to file a return, the IRS may impose a negligence penalty, or other sanction, if any income from an account for which you receive an Informational Tax Reporting Statement is taxable and the IRS determines that it has not been reported by you.

How to report your mutual fund income

If you are required to file a federal tax return, the IRS generally requires you to report information for each mutual fund separately in the applicable section of your federal tax return rather than reporting an aggregate total of all your dividends, and/or sales of shares from all your mutual funds under the name "Fidelity Investments."

Reporting for transferred accounts

If your account was transferred to Fidelity in 2014, your Informational Tax Reporting Statement only includes activity from the time your account was established here. You may wish to contact your former clearing firm for information about any activity prior to the transfer.

Fidelity's 2014 Informational Tax Reporting Statement has two parts:

  • Informational Tax Reporting Statement—The year-end account information as it would appear in a Fidelity Form 1099 Tax Reporting Statement. It summarizes dividends (including exempt-interest dividends), other distributions, and sales proceeds. This information is not reported to the IRS.
  • Detail Information—Additional information that you may find helpful. This information is not reported to the IRS.

We base the Informational Tax Reporting Statement on general IRS information reporting requirements for individuals. You may be subject to different tax reporting requirements. Depending on your situation, the information in your Informational Tax Reporting Statement may not be accurate or appropriate for tax preparation purposes. We suggest that you consult your tax advisor before using any of this information for tax preparation.

Sample statements are for illustrative purposes only. Certain categories of transactions may not pertain to your account.

The Dividends and Distribution section lists all taxable dividends, long-term capital gain distributions, and nondividend distributions from mutual funds held in your account. Columns 10 and 11 report mutual fund tax-exempt interest dividend and private activity bond interest dividends. Specified private activity bond interest must be taken into account in computing the federal alternative minimum tax (AMT). The tax-exempt interest reported in column 10 includes these specified private activity bond interest dividends, if any. For more information, see the IRS Instructions for Form 4626, Alternative Minimum Tax—Corporations (PDF).

If an Unrecaptured Section 1250 gain, Section 1202 gain, or Collectibles (28%) gain was distributed, lines 2b, 2c, and/or 2d will appear, respectively, in this section. If your fund paid foreign tax, we report the amount that you may be able to claim as a deduction or credit in column 6. We add the foreign tax paid to the dividend amount you received and report the total in column 1a and, if applicable, column 1b. For this reason, the total dividends reported on the statement may be higher than the amount that you actually received.

For additional 2014 foreign tax credit pass-through information, in early February you will be able to see the Tax Information for Corporate Investors About Foreign Tax Paid letter on Fidelity's Mutual Fund Tax Information page.

A portion of column 1a—Total Ordinary Dividends—may be eligible for the deduction for dividends received from domestic corporations under Internal Revenue Code Section 243. If you received a dividend from a Fidelity mutual fund, which may qualify for the corporate deduction for dividends received, in mid-February you will be able to see the Dividends-Received Deduction Information for Corporate Shareholders letter on Fidelity's Mutual Fund Tax Information page. This letter identifies the percentage of each dividend distribution from a Fidelity mutual fund reported in column 1a that is attributable to dividends received by the fund from domestic corporations and which may qualify for the corporate deduction for dividends received.

The Proceeds From Broker and Barter Exchange Transactions section reports your proceeds information in up to three subsections; Short-Term Transactions, Long-Term Transactions, and Transactions for Which Term Is Unknown. For your Fidelity Funds account, your cost basis information for redemptions, sales, etc. will appear in one of these sections.

We report all transactions on a trade-date basis, and we report the proceeds as gross proceeds. If you are required to file a federal tax return, you will generally be required to provide the adjusted basis for the shares sold, in order to determine the associated realized gain or loss. Fidelity provides estimated cost basis, realized gain and loss, and holding period information in one of the subsections, listed above.* If your account also has reportable Form 1099-B information, we will also present that information in this section of your Informational Tax Reporting Statement.

* Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for tax reporting purposes. However, other than S-corporation accounts, accounts receiving an Informational Tax Reporting Statement are categorized as exempt from IRS reporting. Account holders should verify Fidelity-provided cost basis and holding period information in the Realized Gain/Loss sections of their Informational Tax Reporting Statement 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.

Bifurcation of cost basis information

Fidelity follows IRS rules for calculating average cost basis for mutual funds. Due to the cost basis reporting regulations for non-exempt accounts, Fidelity tracks separately average cost for "covered" and "noncovered" Fidelity mutual fund shares. Positions, using the average cost calculation method, that include both noncovered and covered shares are considered bifurcated. As such, these positions comprise the following:

  • Fidelity mutual fund 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 we calculate the average cost basis for covered and noncovered lots separately.

This section lists exempt interest dividends from Fidelity municipal funds declared during 2014, and the amounts of those interest dividends that are attributable to in-state obligations and to out-of-state obligations. State tax rules for corporations may render some of these amounts inappropriate for use by corporations. Consult your tax advisor for more details.

  • How do the new IRS cost basis reporting rules apply to my Fidelity Funds account?

    For non-exempt accounts, 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, mutual fund companies (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, covered securities are:

    • Stock in a corporation purchased on or after January 1, 2011.
    • Registered investment companies, including open-end mutual funds, and stocks acquired in dividend reinvestment plans purchased on or after January 1, 2012.
    • Additional types of securities, including fixed income securities and options, as determined by the Treasury Department, purchased on or after January 1, 2014.

    The IRS Form 1099-B is part of the non-exempt Fidelity Tax Reporting Statement. Your Informational Tax Reporting Statement presents proceeds information in a similar fashion. If any of your proceeds information is deemed IRS-reportable (for example, if you are classified as an S corporation), we will also send you a non-exempt Tax Reporting Statement including Form 1099-B. Whereas in past years certain information appeared on either the Informational Tax Reporting Statement or on the (1099) Tax Reporting Statement, but not on both, this is no longer the case. As a result, we also include your information, reported on the 1099 Tax Reporting Statement, on the Informational Tax Reporting Statement. We only report 1099 Tax Statement information to the IRS.

  • Why is there a difference between what is reported in my Fidelity statements and what is reported in my Informational Tax Reporting Statement?

    We only provide Informational Tax Reporting Statements to customers who our records indicate are exempt from Form 1099 reporting. The information on the Informational Tax Reporting Statement that you receive is determined as though we were required to report to you under the IRS Form 1099 reporting requirements. These requirements differ in certain respects from the manner in which Fidelity reports to you through monthly, quarterly, and year-end statements. For example, while the IRS requires sales transactions to be reported based on the trade date (as reflected in your Informational Tax Reporting Statement), your Fidelity statements reflect sales based on the settlement date. In addition, following IRS requirements, we report the mutual fund distributions declared as payable to shareholders of record in October, November, or December 2014, and paid prior to February 1, 2015, in the 2014 Informational Tax Reporting Statement.

  • Is a corporation eligible to claim a dividends-received deduction with respect to qualified dividends reported in the Dividends and Distributions section of the Informational Tax Reporting Statement?

    Not necessarily. The qualified dividend distributions reported include distributions of qualified dividends received from foreign corporations (for which the dividends received deduction cannot be claimed). If you received a dividend distribution from a Fidelity mutual fund reported in column 1a in the Dividends and Distributions section of the Informational Tax Reporting Statement that may qualify for the corporate deduction for dividends received, in mid-February you will be able to see the Dividends-Received Deduction Information for Corporate Shareholders letter on Fidelity's Mutual Fund Tax Information page. This letter identifies the percentage of each dividend distribution from a Fidelity mutual fund reported in column 1a that is attributable to dividends received by the fund from domestic corporations and which may qualify for the corporate deduction for dividends received.

  • Are the amounts reported in the Tax-Exempt Income From Fidelity Funds section exempt from corporate income taxation?

    This income may be exempt from corporate income taxation at the federal level, yet subject to taxation at the state and/or local level. It also may be subject to the federal alternative minimum tax. Consult your tax advisor who is most familiar with your tax situation and with the tax laws of your state and/or locality.

  • What are the primary tax implications of 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 own a mutual fund that held foreign securities that paid dividends or interest, the mutual fund may have paid foreign taxes in respect to those securities. As a shareholder of that mutual fund you may be able to claim a credit or a deduction on your federal tax return for a portion of those foreign taxes. The Dividends and Distributions section reports the gross amount of the dividends you received (including the foreign tax amount) and the amount of foreign tax (if any) that you may be able to claim as a credit or a deduction. For additional 2014 foreign tax credit pass–through information for Fidelity funds, in early February you will be able to see the Tax Information for Corporate Investors About Foreign Tax Paid letter on Fidelity's Mutual Fund Tax Information page. You may also want to consult your tax advisor or refer to IRS Instructions for Form 1118, Foreign Tax Credit — Corporations (PDF).

Additional information

eDelivery of tax statements
Customers may choose to stop receiving their tax statements by mail and instead receive an email notifying them when their tax statement is available for viewing online. Contact a Fidelity representative or your investment professional for further information about eDelivery options.

The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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