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Help Completing Your 2013 Form 1040, Schedule D

This guide can help you report capital gains and losses on Form 8949 and Form 1040, Schedule D.

In nonretirement accounts, the sale, redemption, or exchange of individual securities and mutual funds, other than money market funds, is reported to you and the IRS on Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, (part of the Fidelity tax reporting statement). Using Form 8949 and/or Form 1040, Schedule D, you must report a summary of sales or exchanges, and any gains or losses to the IRS. Generally your gain or loss is the difference between your cost basis and the proceeds from the sale or exchange. You can think of cost basis as the total cost of purchasing the security, including various adjustments.

2013 update on cost basis reporting to the IRS

On April 18, 2013, the IRS issued Final and Temporary Regulations governing "[Cost] Basis Reporting by Securities Brokers and Basis Determination for Debt Instruments and Options; Reporting for Premium." These updated rules modified brokers' cost basis reporting requirements, especially for debt instruments, such as bonds and options. Here is a summary of Fidelity’s cost basis reporting requirements.

Fidelity began reporting cost basis and other related information for certain covered securities on Form 1099-B, for Tax Year 2011. Form 1099-B is primarily used to report sales, redemptions, and exchanges of securities. We are required to report most 1099-B information to you and the IRS.

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 – Non-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 non-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)

Cost basis information on your tax reporting statement for brokerage accounts

Type of security Location of cost basis information in your tax statement
  • Equities
  • Mutual funds and other securities in dividend reinvestment plans
  • Fixed income securities without adjustments
  • Short sales opened in after 12/31/2010 and closed during 2013
1099-B only
  • Foreign equities
  • Foreign fixed-income securities
  • Domestic fixed-income securities with cost basis adjustments
1099-B
Additional information in the realized gain/loss sections
  • Options
  • Short sales, opened prior to 2011
  • Foreign currency transactions
Realized gain/loss sections only

Additional resources

If you have any questions or need additional information, please call 800-544-6666. Fidelity representatives are available 24 hours a day, 7 days a week. Please remember however, that Fidelity cannot provide legal or tax advice on your individual tax situation. For answers to those types of questions, you will need to contact your tax advisor or the IRS. You may also find the IRS website helpful.

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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