Understanding the tax forms

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
rm
Posts: 331
Joined: Fri Oct 31, 2008 6:09 pm

Understanding the tax forms

Post by rm »

I was looking at this years tax forms. My broker (Wellsfargo) sent a 2011 enhanced 1099. In that he listed the long term gain and losses (1099B) for securities I had purchased before 2010. However he also put an asterix, saying the cost basis will not be reported to IRS since its a non-covered security.

Question: Does the IRS get a different form from brokers than the 1099-B they send us? It seems weird that they sent us a 1099-B with all the cost basis etc information and then went out of their way to delete this information for a seperate form to the IRS.

Anyone have any insight into this ...

thanks
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: Understanding the tax forms

Post by livesoft »

In this case, yes. WellsFargo is a great broker and tracks your cost basis accurately (at least that's my experience). When you download your WF 1099B into your tax software, it gets the cost basis there, too. But for non-covered shares WF is not required to tell the IRS what your cost basis is, so they don't.
Wiki This signature message sponsored by sscritic: Learn to fish.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: Understanding the tax forms

Post by sscritic »

It's not a matter of deleting information from a 1099. The IRS requires certain information. Vanguard, Wells Fargo, and other brokers give the IRS what is required. That doesn't stop Vanguard and other brokers from giving you more information. I guess their other choice is to give you less information (but not less than what the IRS requires).
Default User BR
Posts: 7502
Joined: Mon Dec 17, 2007 6:32 pm

Re: Understanding the tax forms

Post by Default User BR »

Before the recent changes, the basis was often whatever you told the brokerage when you transferred assets. There was no requirement for any custodian to track or transfer the information. So the accuracy of the basis was not proven from the standpoint of the brokerage. Some didn't mind keeping track and letting the customer know as a courtesy.


Brian
User avatar
grabiner
Advisory Board
Posts: 35307
Joined: Tue Feb 20, 2007 10:58 pm
Location: Columbia, MD

Re: Understanding the tax forms

Post by grabiner »

Default User BR wrote:Before the recent changes, the basis was often whatever you told the brokerage when you transferred assets. There was no requirement for any custodian to track or transfer the information. So the accuracy of the basis was not proven from the standpoint of the brokerage. Some didn't mind keeping track and letting the customer know as a courtesy.
And Vanguard still does this for non-covered stocks. I converted a mutual fund to an ETF last year, and Vanguard let me enter whatever I wanted for the purchase date and basis on my ETF shares, as it didn't have the cost records for the mutual fund.
Wiki David Grabiner
User avatar
Epsilon Delta
Posts: 8090
Joined: Thu Apr 28, 2011 7:00 pm

Re: Understanding the tax forms

Post by Epsilon Delta »

The IRS does actually prohibit certain information on a1099 sent to customers. For example they prohibit column totals.
Post Reply