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
Understanding the tax forms
Re: Understanding the tax forms
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.
Re: Understanding the tax forms
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).
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Re: Understanding the tax forms
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
Brian
Re: Understanding the tax forms
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.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.
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Re: Understanding the tax forms
The IRS does actually prohibit certain information on a1099 sent to customers. For example they prohibit column totals.