You’ve received your 1099-B and are all set to start filing your taxes. But then you review your form. You notice non-covered cost basis, and some of it is missing. Now what? We’ve got you covered with some information on the essentials of non-covered securities.
The Basics: Covered vs. Non-Covered
Non-covered cost basis is the cost basis for securities purchased prior to January 1, 2011. At that time, a new cost basis requirement was enacted that requires brokers to report cost basis information on Form 1099-B and to the IRS after the sale of certain securities. The rule is now fully in effect, but was initially rolled out in phases:
- January 1, 2011: Equities
- January 1, 2012: Mutual funds and equities purchased through dividend reinvestment plans
- January 1, 2014: Fixed-rate debt instruments and options
- January 1, 2016: Variable-rate debt instruments and other complex securities
If you sell securities purchased prior to the dates listed above, your 1099-B may not include cost basis information, or it may be incomplete. This doesn’t mean the non-covered cost basis isn't reportable; rather, it's not required to be reported by a broker to the IRS. You're still responsible for including this information on Schedule D of your tax return.
Calculating Cost Basis
Gone are the days when you tracked your cost basis on a general ledger notebook with a pencil (and a very large eraser). TD Ameritrade offers a more efficient and easier way to determine cost basis with the Gain/Loss page powered by GainsKeeper®.
All covered securities are automatically tracked in GainsKeeper and the cost basis is automatically adjusted for wash sales, corporate actions, dividend reinvestments, return of capital, gift adjustments, inheritances, and any other adjustments.
Non-covered securities are also tracked, but depending on the year of purchase, the original purchase information may not be available in GainsKeeper.
All of your current cost basis information, covered and non-covered, in GainsKeeper flows to Form 1099-B for taxable accounts. The non-covered cost basis will display in the non-covered section of the form, but won’t be reported to the IRS. Having the cost basis for covered and non-covered securities in one place may help you streamline the tax filing process.
Looking Beyond 2017
Even if you've already reported your taxes for securities you sold in 2017, you may own other non-covered securities for which you'll need to report the cost basis in the future. To help avoid any issues down the road or missing information, you can check your covered and non-covered cost basis on the Gain/Loss page in GainsKeeper. Simply click the "Edit your GainsKeeper cost basis" button if you need to update the information for a non-covered security. If there is missing basis you are unsure of, or the basis doesn't seem accurate, you can call the number below for assistance.
How Can We Help?
If you have any questions, client services are available. To speak with a Tax Services Representative, call Monday through Friday, 9 a.m. to 5:30 p.m. ET.