As of January 1, 2011, IRS regulations requires that brokers, transfer agents, and issuers report adjusted cost basis information to you and the IRS. This impacts you in several ways:

  • A Form 1099-B will be sent to you by brokers and transfer agents whenever a covered stock sale takes place.
  • When you transfer stock, you are required to identify if the transaction is a sale, gift, or inheritance.
  • FIFO is the default method for calculating your cost basis, although you may select specific lot identification by submitting a request in writing to the broker or transfer agent.
  • If you opt for specific lot identification, you must select the tax lot you wish to sell prior to the transfer taking place.
  • Short sales are reported at the time the short is opened, rather than closed.
  • You are required to consolidate all Form 1099-B’s you receive from brokers and transfer agents, and adjust the information as necessary on Schedule D.

To request a free copy of our exclusive Cost Basis Breakdown, please click here.
To read the regulation, click here.

Quick Tips & Highlights:

  • Only stock that is acquired on or after January 1, 2011 is covered by these new reporting regulations.
  • When you submit a transfer, indicate whether the transaction is a gift, sale, or inheritance.
  • If it is an inheritance, provide the fair market value of the securities as of the date of death.
  • If you do not indicate what type of transaction you are presenting to the transfer agent, gift tax rules will apply. 
  • If you elect the average cost basis method, you may not change this method later. 

Useful Forms: