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Help Completing Your 2014 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.

2014 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 calculation methods

There are two IRS-approved methods for calculating cost basis: "cost basis" and "average basis" (average basis is often referred to as average cost). The cost basis method, available for all types of securities, uses the actual purchase cost of the shares sold (plus or minus required adjustments). The average cost method determines an average cost per share for all shares you currently own. Average cost is available only for mutual fund shares and qualifying stock held in a dividend reinvestment plan (DRIP).

Unless you elect a different cost basis calculation method, Fidelity will apply its default methods: average cost for mutual fund positions, and cost basis for all other types of securities.*

If we use the cost basis method, we will deplete shares from your account position on a first-in, first-out (FIFO) basis unless, before settlement, you make specific identification of shares to be depleted. To deplete shares on a basis other than FIFO, you can identify the individual lots you wish to sell, or you can provide a "standing instruction," designating an account disposal method to Fidelity. This allows you to make specific identification trades using a set method. Positions set to average cost are always depleted on a FIFO basis. See IRS Publication 550, Investment Income and Expenses, for additional information.

Note: Fidelity cannot make any changes to your basis method or specific identification information once a trade has settled.

* Fidelity will report gross proceeds as well as certain cost basis and holding period information to you and 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.

Calculating cost basis for mutual funds

For mutual fund shares purchased before January 1, 2012 (noncovered shares), you can choose average cost by making an election on your tax return. You are responsible for maintaining all records necessary to substantiate the average cost you report. Unless otherwise indicated, Fidelity provides estimated cost basis information for your mutual funds using average cost. Fidelity-provided cost basis information for mutual fund shares acquired before January 1, 2012, is not reported to the IRS and is not a substitute for your own documentation. Fidelity began tracking cost basis information for mutual funds in 1987 and is unable to provide cost basis information for any purchases made before that date.

If you held shares of the same mutual fund in more than one account, you will need to include all of those shares you held in those accounts when you calculate your average cost for sales made in 2011 and prior years.

Calculating cost basis for individual securities

For covered securities, your Form 1099-B shows the "cost or other basis" (column 1e) as Fidelity is required to calculate it under IRS rules. We will determine the cost basis for any security sold without a specific-share identification according to our default calculation methods. If you made a specific identification of covered shares, prior to settlement of the trade, you will see that choice reflected in the cost basis reported on your 1099-B. For noncovered securities, Fidelity has provided basis information using the cost basis method and depleting shares on a FIFO basis. If you made a specific identification of noncovered shares, we will also reflect that calculation in the cost basis on your Form 1099-B. For both covered and noncovered shares, Fidelity provides estimated gain/loss information.

Fidelity's estimated gain or loss may not include all adjustments that you are required to make when completing Form 8949 and/or Schedule D. Fidelity began tracking cost basis information for individual securities in 1993 and is unable to provide cost basis calculations for any purchases made before that date.

Customer-provided cost basis information

For covered securities, IRS regulations preclude Fidelity from accepting customer-provided cost basis information. For noncovered securities, if Fidelity cannot provide cost basis information for a mutual fund or an individual security in your account, you can provide it, and we will retain that information as your basis from that time forward. These figures will be labeled as "customer-provided" on your trade confirms and on your monthly/quarterly account statements. Please note that if you provide cost basis information on a tax lot, we will use that cost basis and the holding period date for the calculation of wash sales going forward. Note that when positions are transferred between accounts with different taxpayer identification numbers, in certain cases, Fidelity may automatically transfer the associated cost basis information and deem it to be customer-provided.

Adding cost basis information

Go to Accounts & Trade > Portfolio Summary, (login required) and select Positions in the Select Action box to the right of the account you wish to update. Next, click on the Cost Basis tab and then find the Cost Basis column and click on Enter Cost in the row of the security you wish to update. Then, in the Lots Eligible for Customer Provided Basis table, click on Update Basis, and provide the information required. Fidelity does not report customer-provided cost basis information on noncovered securities to the IRS.

For 2012, the IRS required most taxpayers to report Form 1099-B information on Form 8949 and summarize it on Form 1040, Schedule D. However, since tax year 2013, the requirement has changed. In many cases, use of Form 8949 is now optional. Taxpayers may use it if they wish to provide detailed transaction information along with their Schedule D summary. However, taxpayers should continue to report any transactions requiring adjustments to 1099-B on Form 8949. The Fidelity Form 1099-B closely mirrors the formats of both Form 8949 and Schedule D. Following IRS guidelines, we organize the information on the Form 1099-B into the following sections:

  • Short-term covered
  • Short-term noncovered
  • Long-term covered
  • Long-term noncovered
  • Transactions whose basis is not reported to the IRS and whose term is unknown

New in 2014, there is a 6th section to report Section 1256 Option Contracts for covered positions. Non covered Section 1256 Option Contracts continue to be reported on the Supplemental Realized Gain/Loss section.

Fidelity has provided most of this cost basis information to customers for many years. It is the requirement that we also convey cost basis information for covered shares transactions to the IRS that is at the heart of these new requirements.

For brokerage account customers, we continue to provide Supplemental Realized Gain/Loss Sections (if applicable) in the tax statement, in order to report additional information about certain transactions, reported on Form 1099-B, and to describe transactions which we do not report at all on the Form 1099-B. For a quick guide on where cost basis information related to disposition of securities might be located on your tax form, please see cost basis information on your tax reporting statement.

Mutual funds and other securities in dividend reinvestment plans (DRIPs)

Fidelity follows IRS rules for calculating average cost basis for mutual funds and other securities in DRIPs. This cost basis is reported on the 1099-B by Fidelity to the IRS and to clients for use in their capital gain and tax calculations.

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 of the same mutual fund that occurred on or after January 1, 2012

Help completing Form 1040 Schedule D and Form 8949

As in past years, when filing their tax returns, most customers must report all proceeds that they received during the year, as well as gain/loss information, by completing Form 1040, Schedule D, Capital Gains and Losses (PDF). In order to incorporate information from the enhanced Form 1099-B into the Form 1040 process, the Schedule D for tax year 2014 includes Form 8949, Sales and Other Dispositions of Capital Assets (PDF), which customers may complete to present details of individual transactions and/or if they need to make any adjustments to the information reported on Form 1099-B. Schedule D is used to summarize all short-term and long-term Capital Gain/Loss information on a single page. If you complete Form 8949, you will summarize that information on Schedule D. Please see the IRS 2014 Instructions for Schedule D (PDF) and Instructions for Form 8949 (PDF) when they become available. You should also refer to the Instructions if in 2014 you disposed of property that you acquired by inheritance.

Note: As of our publication date, the IRS has not yet released final copies of the 2014 Schedule D and Form 8949 instructions. Once they are available, we will update the following information if necessary.

Form 8949 column-by-column

Form 1099-B and the supplemental Realized Gain/Loss sections of your tax statement are arranged to align with the order of presentation of the columns on Form 8949.

  • Description of property: Indicate the name of the security and the number of shares (e.g., 100 sh. XYZ Co.).
  • Date acquired: This is the date you acquired the shares that you sold. With the exception of short sale reporting, the IRS requires us to use the trade date (not the settlement date) as the acquisition date. In the case of mutual fund or DRIP plan shares using the average basis method, we will record multiple acquisition dates as "various" on Form 1099-B. If the holding period date has been adjusted (for example by a wash sale), then the adjusted holding period date will be displayed in place of the original acquisition date.
  • Date sold or disposed: This is the date you sold the shares. Once again, the IRS requires us to use the trade date (not the settlement date) as the date sold. For a short sale, this is the date that shares were delivered to close the short sale.
  • Proceeds (sales price): For Fidelity Fund accounts (not brokerage accounts), we report the gross amount as the sales price. For Fidelity brokerage accounts, we report the sales price as the net amount after commissions. Additionally, the proceeds amount could be adjusted by any applicable option premium.
  • Cost or other basis
  • Code: The IRS has provided various codes to explain any adjustments you make to certain information reported on Form 1099-B. See the IRS 2013 Instructions for Schedule D (PDF) when they become available.
  • Amount of adjustment
  • Gain or (loss)

When completing Schedule D and/or Form 8949 for covered securities, report the basis shown on Form 1099-B. If the basis shown on Form 1099-B is not correct, follow the IRS Instructions for Schedule D (PDF) when they become available, to complete columns f and g for providing corrections.

Reporting short sales

Fidelity is required to report any short sale entered into in 2011 or later only in the year that you 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 before 2011, this transaction will not appear on your 2014 1099-B, but it will appear in the supplemental short-term realized gain/loss section. You must report all gains and losses resulting from closing short sale positions on Form 8949 and/or 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.

The following factors may result in adjustments to the original price paid for your securities. Furthermore, other adjustments may also be necessary depending on your individual tax situation.

Sales charges and commissions

Fidelity includes sales charges and commissions in the cost basis information it provides. You may not be able to include the sales charge paid for a mutual fund in the cost basis of the shares sold if you bought a fund, incurred a sales charge, sold or exchanged those shares after holding them 90 days or less, and then purchased shares in the same or another fund at a reduced sales charge. Include the sales charge in the cost basis calculation for the shares purchased with the reduced sales charge. Fidelity is unable to account for this type of activity at this time.

Redemption fees

For mutual fund accounts, Fidelity adds redemption fees to the cost basis of the shares sold. As a result, the cost basis reported in your tax statement might not equal the average cost basis per share multiplied by the number of shares. For brokerage accounts, Fidelity deducts redemption fees from the gross proceeds.

Reinvested dividends and capital gains

The cost basis information in your tax statement includes shares purchased with reinvested dividends from both mutual funds and individual securities. For your mutual fund holdings, the cost basis information also includes reinvested capital gain distributions.

Account fees

If you were charged a mutual fund maintenance fee and we redeemed shares to pay the fee, we will include this redemption on your Form 1099–B. You should report this transaction on Form 8949 and/or Schedule D.

At the time of the sale or redemption, Fidelity determines a gain or loss, based on the cost basis method (average cost or cost basis) on record for this fund in your account. However, if Fidelity was using the specific shares depletion method to track your cost basis for the fund(s) subject to the maintenance fee, your gain or loss resulting from the maintenance fee redemption was calculated using the first-in, first-out depletion method.

Wash sales

We report wash sales on Form 1099-B, columns 1f, Code if Any, and 1g, Adjustments. A wash sale may occur if you sell securities (including options) at a loss and, within the 61-day period beginning 30 days before and ending 30 days after the date of sale, you buy the same or a substantially identical security in the same or a different account. The additional shares are considered as having "washed" your loss, and the loss from the sale transaction should be "disallowed" for tax purposes. The loss should be added to the cost basis of the newly purchased shares, essentially deferring the loss until those shares are sold.

Fidelity applies wash sale rules to all tax lots, regardless if they are customer-provided or not. This means that if you provide cost basis information on a tax lot, that cost basis and the holding period date will be used for the calculation of wash sales going forward.

Fidelity generally identifies wash sales that occurred within a single taxable account as a result of the sale and purchase of the same (but not a substantially identical) security, and adjusts accordingly the cost basis information records we provide to you. However, Fidelity is unable to identify wash sales resulting from transactions involving substantially identical securities, or transactions across accounts. You should always rely on your records to determine if and when a wash sale occurs. For covered securities, you should complete Form 8949 and/or Schedule D using Fidelity-provided wash sale information from Form 1099-B, making adjustments if necessary. For noncovered securities, use the Fidelity-provided wash sale information only for comparative verification. This is true whether you hold the same or substantially identical securities in one account, or in several accounts, including accounts at different financial institutions. You will also need to rely on your own records to determine if a loss cannot be recognized as a result of transactions between related parties or as a result of the application of other tax law provisions similar to wash sale rules. Consult your tax advisor regarding your specific tax situation.

Worthless securities

Fidelity provides cost basis information for worthless securities in the supplemental realized gain/loss sections of your tax statement. Following your request to deem a security worthless and remove it from your account, Fidelity will remove it from your account if the security meets certain requirements. Fidelity's removal of the security from your account is not a determination that the security is worthless for federal tax purposes and the IRS is not bound by Fidelity's assessment. While the cost basis information includes the date Fidelity removed the security from your account, federal tax rules generally treat losses on worthless securities as occurring on the last day of the tax year in which they became worthless. For this reason, you generally will need to adjust the Fidelity-provided date of disposition to December 31 of the year in which the security became worthless. You may wish to consult a tax advisor to determine the proper year in which the loss should be reflected.

Fidelity provides adjusted basis, including discount accretion and premium amortization calculations for reporting certain fixed income security sales, redemptions, and related dispositions. For tax year 2014 (tax forms to be mailed in February 2015) we will begin reporting this adjusted basis information to the IRS on Form 1099-B for less complex fixed income securities, acquired no earlier than January 1, 2014, and subsequently sold or redeemed. Accretion or amortization adjustments are typically required when an individual bond was purchased respectively at a discount or at a premium. These adjustments affect cost basis calculations, which in turn affect the calculation of gains or losses. Fidelity already provides adjusted basis information on Form 1099-B for the securities (including original issue discount securities) on which we include accretion and amortization information in our calculations, but as the form indicates, we are providing that adjusted basis information to the IRS for the first time this year.

The IRS permits different methods to calculate cost basis, as well as amortization and accretion amounts, and Fidelity made certain assumptions about those methods when calculating this information. It is extremely important that you and/or your tax advisor read the footnotes on the 1099-B, as well as in the realized gain/loss sections associated with this information, and the information presented in this guide, to determine if the assumptions being made are applicable to your individual tax situation.

If they are different from the method you are using, or are based on tax elections you did not make, then you will need to make further adjustments to the amount shown. Even if the assumptions are consistent with your tax situation, further adjustments may still be necessary to reflect unique tax situations or events not factored into the assumptions. The information provided and the explanations below pertain only to the federal tax treatment of these items. State tax rules vary, and you will need to contact your tax advisor, or the taxing authority of your state, for information on how to report these items on your state tax return.

Fidelity does not provide amortization, accretion, and similar adjustments for certain fixed income securities, such as securities with a maturity of one year or less, unit investment trusts, or securities of foreign issuers. For fixed income securities subject to paydowns (early repayment of principal), cost basis is adjusted using a method that takes paydowns into account and calculates original issue discount, premium, and acquisition premium using a straight-line method. Where current year premium or acquisition premium amortization is provided, the prior years' cumulative amortization is reflected in the adjusted cost basis, but we cannot provide a breakdown or the total of such prior amortization amounts. You may want to consult with your tax advisor, who is most familiar with your circumstances, before determining how to use this information for tax reporting purposes. In addition, see IRS Publication 550, Investment Income and Expenses (PDF) and Publication 1212, IRS Guide to Original Issue Discount Instruments (PDF).

Fixed income securities acquired with original issue discount (OID)

Under federal tax laws and regulations, for the original issue discount rules to apply to a security, the discount at issue must be at least 0.25% of the stated redemption price of the bond at maturity, multiplied by the number of full years from the date of original issue to maturity. Otherwise, the discount at issuance is considered to be zero. Fidelity incorporates this rule in its OID calculations.

Every year, a portion of the OID is treated as if it were earned interest income. As a result, the OID earned increases your cost basis in the security. Fidelity has adjusted the cost basis reported in your statement to reflect the total OID recognized as income since the acquisition date of the security in our records as well as the OID information reported in Publication 1212. In addition, if you purchased the security at a premium or with market discount in relation to the adjusted issue price, Fidelity has incorporated a portion of that premium or discount in its calculation of the adjusted cost basis and its determination of the character of the realized gain.

Fixed income securities acquired at a premium to their redemption value at maturity

According to federal tax rules, if you acquired your fixed income security at a premium and make the required elections when you file your return, the premium is amortized annually using the constant yield method (also called the yield to maturity method) with semiannual compounding. If you did not make the required elections, your gain or loss is the difference between your purchase price (as adjusted for wash sales and other required adjustments, if any) and your proceeds at disposition, making no premium adjustments. These rules apply to securities issued at par and to OID securities acquired on the secondary market at a price greater than their maturity value.

Fixed income securities acquired with an acquisition premium

When OID securities are purchased at a premium over the adjusted issue price (plus any accreted OID income), the premium, called an acquisition premium, must be amortized and reflected in the calculation of the adjusted cost basis. It will impact the taxable income you will recognize each year. Fidelity has calculated the adjusted cost basis, including the acquisition premium amortization, on the assumption that you elected to use the rateable accrual method in which OID income is reduced by the pro rata portion of the acquisition premium attributable to each year's OID earned. Here is the formula:

  Current year acquisition premium =  (total acquisition premium at purchase × current year OID)
 (remaining OID from the time of purchase)

The adjusted cost basis of an OID bond acquired with an acquisition premium equals the sum of the original purchase price plus OID income earned during the period you held the bond, minus the acquisition premium attributable to the OID earned.

Fixed income securities acquired at a market discount to the issue price

Note: These rules apply to both securities issued at par and with OID.

Fixed income securities acquired at a market discount are purchased at less than the par value, or in the case of OID securities purchased on the secondary market, at less than the adjusted issue price. Under federal tax rules, market discount that is less than 0.25% of the stated redemption price (or OID-adjusted issue price) of the bond multiplied by the number of full years to maturity remaining at acquisition is treated as zero.

There are various rules and elections available for the treatment of market discount on your return, each of which may result in a different tax outcome. These rules only apply to fixed income securities issued with more than one year to maturity. Our calculation of market discount income assumed you elected to defer recognizing the market discount until the sale (disposition) of the security, and was calculated using the straight-line method from acquisition date through disposition date. For federal tax purposes, market discount income from both taxable and tax–exempt bonds is treated as taxable interest income. Under this election, no market discount is recognized if the bond was sold at a loss.

Acquiring securities issued with one year or less to maturity at a discount may result in an acquisition discount. Different rules apply to the treatment of a gain or loss for these securities.

Cost basis adjustments for tax-exempt fixed income securities

In contrast to taxable fixed income securities, adjusting the cost basis of a tax-exempt security that was purchased at a premium to reflect amortization of premium (but not amortization of acquisition premium) is not optional, it is mandatory. The amortization of premium on tax-exempt securities is not deductible. Market discount does apply to tax-exempt securities. As with taxable bonds, you are required to recognize a portion of the gain at disposition of those securities as ordinary income. While OID income from a tax-exempt fixed income security is exempt from federal taxes, it may be taxable on the state level.

Enhanced reporting for widely held fixed investment trusts (WHFITs)

Due to IRS reporting requirements, Fidelity provides enhanced tax reporting on your consolidated tax statement 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 providing interest 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 gross income and your prorated share of all expenses, as well as information you may need to accurately report sales and resulting realized gain and loss information. Furthermore, for WHFIT securities, due to "receipt-based" reporting rules, your trust is required to report your prorated share of sales 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 and expenses are distributed to shareholders. These proceeds may not match any distributions that you may have received during the year.

Return of principal

The manner in which we are required to report return of principal merits special attention. We report your prorated share of the sales proceeds from 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 are reporting 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. 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 this action reduces your basis 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.

Cost basis for trading in currencies other than U.S. dollars

Fidelity's cost basis reporting includes trading on foreign exchanges and in foreign currencies. We report sales and dispositions on Form 1099-B only in U.S. dollars. If you purchased a security in a foreign currency, then following its sale or disposition, the supplemental realized gain/loss sections of your tax statement provide both the cost in that currency and the estimated U.S. dollar (USD) cost basis in the Cost Basis column. We calculate that estimated USD cost basis by converting the foreign currency cost into USD based on exchange rates on the trade date of the purchase.

If you received proceeds in a foreign currency from a security sale the Realized Gain/Loss sections provide both the foreign currency proceeds and the USD equivalent proceeds in the Proceeds column. We calculate the USD equivalent proceeds by converting the foreign currency proceeds into USD based on exchange rates on the trade date of the sale.

If you acquired the foreign currency cost, or sold the foreign currency proceeds in exchange for USD in a separate currency transaction linked to the security transaction, then the trade date exchange rate we used is the spot rate at the time of the linked currency transaction. Otherwise, the trade date exchange rate we used is the end-of-day exchange rate.

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.

Refer to the footnotes in the realized gain/loss sections of your tax statement for additional information about our calculations of USD proceeds and cost basis in connection with these types of transactions. In addition, consult your tax advisor for additional information about reporting transactions on foreign exchanges and/or in foreign currencies.

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.

In addition, the supplemental currency realized gain/loss section of your tax statement provides estimated cost basis, proceeds, and gain/loss information for transactions in which you dispose of foreign currency positions (i.e., exchanges of foreign currency for USD, exchanges of foreign currency for a different foreign currency.) Generally, gains and losses from these types of transactions are not reported on Schedule D, but rather as ordinary income or loss. Refer to the footnotes in this section of your tax statement and consult your tax advisor for more information.


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
  • Options
  • Less complex debt
  • Short sales opened in after 12/31/2010 and closed during 2013
1099-B only
  • Foreign equities
  • Foreign fixed-income securities
  • More complex debt
Additional information in the realized gain/loss sections
  • 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.

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.