Cost Basis Definitions

Covered Shares: Shares purchased on or after the effective date of the legislation (1/1/2012 for mutual funds).

Non-covered Shares: Shares purchased prior to the effective date of the legislation or shares where the cost basis is uncertain, unknown, or a mandatory requirement to report.

Fund Default Method: Cost basis accounting method assigned to any accounts in which the shareholder(s) do not specify a cost basis accounting method for the account or upon a redemption request.

Holding Period: The difference between the acquisition date (the trade date of the purchase) and the redemption date (the trade date of the sale) of shares redeemed.  If the difference is greater than one year, the gain or loss will be long-term.  If it is equal to or less than one year, it will be a short-term gain or loss.

Lot: The number of units of a similar kind that have a common set of characteristics such as the number of shares owned by an account that were all acquired on the same day at the same price.

Pre-effective Date: Prior to the effective date of the legislation to report cost basis of 1099-B reportable items. Pre-effective date shares are shares acquired prior to the effective date of January 1, 2012. 

Post-effective Date: On or after the effective date of the legislation to report cost basis of 1099-B reportable items. Post-effective date shares are shares acquired on or after the effective date of January 1, 2012.