question re: my 1099-B form from Vanguard

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question re: my 1099-B form from Vanguard

Postby emh » Fri Feb 08, 2013 2:53 pm

I'm hoping someone here can help me out with a question about my 1099-B form from Vanguard. I just got off the phone with Vanguard and they were unable to answer my question even though they're the ones who sent me the form. And it seemed like a fairly straightforward question. So here goes.

I have four Vanguard funds (GNMA, Total Bond, Wellington, and Wellesley) in a non-retirement account. I wasn't working this past year so I sold portions of my funds throughout the year to keep myself afloat. Okay, so here's what's strange about the 1099-B form. Some of the sales have a acquisition date listed in Box 1b, some don't. And it changes back and forth. As an example, I'll show what it looks like for the first few sales I made from my GNMA fund.

First sale, no acquisition date listed. Second sale, again no acquisition date listed. Third sale, has an acquisition date listed. Next two sales, no acquisition date. Next two sales have an acquisition date listed. I could go on but you get the picture.

Does this make sense to anyone? Why would Vanguard report acquisition dates for some of the sales and not others? BTW, my cost basis method is average cost for all of the funds in case that matters.

Thanks in advance!
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Re: question re: my 1099-B form from Vanguard

Postby DSInvestor » Fri Feb 08, 2013 3:09 pm

For the sales that don't have acquisition dates, perhaps the shares sold were acquired on different dates in which case you'd need to use "VARIOUS" when you enter those transactions on schedule D or form 8949. This could be the case if you made periodic purchases or reinvested distributions to give you many "small" tax lots.

For the sales where there were acquisition dates listed, perhaps those shares were from a single larger tax lot.
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Re: question re: my 1099-B form from Vanguard

Postby livesoft » Fri Feb 08, 2013 4:05 pm

Since YOU sold shares that YOU previously bought, YOU presumably have records. What do YOUR records tell you about these transactions? When YOU sold shares did YOU specifically identify the shares? Did you tell Vanguard to use HIFO? FIFO? LIFO? Something else? (Note: Average Cost is a form of FIFO.)

I can envisage a scenario where you told them to use HIFO which is a form of specific ID and some of the sales used non-covered shares and some used covered shares, but without me looking at YOUR records, I am just making up something to write here.

Sales without an acquisition date are likely to be non-covered shares. Sales with an acquisition date are likely to be covered shares.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: question re: my 1099-B form from Vanguard

Postby emh » Sat Feb 09, 2013 10:07 am

DSInvestor wrote:For the sales that don't have acquisition dates, perhaps the shares sold were acquired on different dates in which case you'd need to use "VARIOUS" when you enter those transactions on schedule D or form 8949. This could be the case if you made periodic purchases or reinvested distributions to give you many "small" tax lots.

For the sales where there were acquisition dates listed, perhaps those shares were from a single larger tax lot.


Thanks DSInvestor. I did some digging and what you said basically fits what happened. Here's what Vanguard says in their FAQ re: cost basis:

"If I use the average cost method for my covered and noncovered shares, how will Vanguard determine which shares are being sold?

If you use the average cost method for covered and noncovered shares, Vanguard will sell your oldest (noncovered) shares first. Once all noncovered shares are sold, Vanguard will sell the covered shares. You'll also have two average cost figures—one for your noncovered shares and one for your covered shares."

https://personal.vanguard.com/us/help/F ... ontent.jsp

Before 2012, I had already sold off my initial $3,000 GNMA investment. So when I started selling shares in 2012, I was selling shares that had come from smaller purchase lots. My first two sales in 2012 from my GNMA account were for $196 and $143. Those are larger than my purchase lots that were being sold at that point ($125). So that's why those two sales don't have an acquisition date...the sales cut across multiple purchase lots. The next sale was for only $35 so that one pulled from a single purchase lot and therefore has an acquisition date.

BTW, Vanguard doesn't have to report those acquisition dates. All of my sales were for noncovered securities and according to the IRS instructions for form 1099B, brokers aren't required to report acquisition dates for sales of noncovered securities. They are required to report them for covered securities. Here are the IRS instructions if anyone wants to see them:

http://www.irs.gov/instructions/i1099b/ar02.html
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