Fiduciary Trust International

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New IRS Cost Basis Tax Reporting Requirements

September 2010

As part of the Emergency Economic Stabilization Act of 2008, Fiduciary Trust is required to begin reporting cost basis information to the Internal Revenue Service on 2011 year-­end Federal tax forms. Although this change will not impact your 2010 tax reporting, we are taking this opportunity to update you on these changes.

OVERVIEW OF THE NEW IRS COST BASIS TAX REPORTING REQUIREMENTS


For securities sold through Fiduciary Trust accounts where we are required to issue IRS Form 1099-­B, we will need to report additional information beginning with the 2011 tax year. New IRS regulations will require Fiduciary Trust to include the following information on Form 1099­-B:

  • Cost or other basis
  • Reported gain or loss
  • Whether the sale represented a short­-term or long­-term capital gain or loss
  • Whether the security was “covered”
    Coveredrefers to securities that are subject to the IRS’s proposed 1099­-B cost basis reporting requirements (see timeline below)
  • If applicable, wash sales loss disallowed
    Wash sales occur when shares of a security are sold at a loss and shares of the same security are repurchased within the 61­-day period, beginning 30 days before and ending 30 days after the sale

THE TIMELINE FOR IMPLEMENTATION

The IRS will phase in application of these regulations, based upon the type of security:

  • 2011-Corporate stock acquired after December 31, 2010
  • 2012-Securities of Regulated Investment Companies (e.g., mutual funds) and Dividend Reinvestment Plans (“DRPs”) acquired after December 31, 2011
  • 2013-All other specified securities, including bonds and options acquired after December 31, 2012

NEXT STEPS

Fiduciary Trust is committed to making implementation of this IRS regulation as easy as possible for you. If you have questions on these changes, please feel free to reach out to your Fiduciary Trust contact, who is always available to answer any questions you might have.

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To set up an appointment or to learn more about Fiduciary Trust, please contact J. Chisholm Lyons in our New York headquarters at (866) 624-3834 or c.lyons@ftci.com. You may also complete the information below and we will respond to you as soon as possible.

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