Cost Basis Resource Center


As a result of the cost basis reporting requirements, effective January 1, 2012, the 1099-B tax forms for the 2012 tax year will be the first to display redemptions of covered shares. Covered shares are shares purchased after January 1, 2012.  In the past, Federated has always displayed available cost basis and gain/loss information for redeemed shares on shareowner 1099-B and Average Cost Statements.  You will now find the cost basis, cost basis reporting method, and gain/loss for each redemption, all noted on the revised Form 1099-B.

The cost basis rules require mutual funds to report covered share redemption cost basis to the Internal Revenue Service (IRS).  The new Form 1099-B segregates your redeemed shares into the appropriate required categories:

  • Covered Short-Term Gain/Loss
  • Non-Covered Short-Term Gain/Loss
  • Covered Long-Term Gain/Loss
  • Non-Covered Long-Term Gain/Loss
  • Non-Covered Shares Gain/Loss Unknown

For your convenience, the tax form clearly indicates which of these categories is reported to the IRS.  The tax laws assign different tax rates to these categories, and we display redeemed shares by category instead of total redemption transactions for your convenience.  If you wish to see additional information, we offer an informational Cost Basis Statement upon request.


 

> Form 1099-B & Tax Form Insert  

 


 

> Cost Basis - Gifted Shares Presentation
> Cost Basis Methods Presentation 

 

Cost Basis Basics

Cost Basis Accounting Methods
Method & AbbreviationBasis CalculationShare Depletion Order
Average Cost (ACST) Cost Basis value is the average of all shares in the account. Oldest shares redeem first.
First In First Out (FIFO) Cost Basis value is derived using the original share purchase price. Oldest shares redeem first.
High Cost First Out (HIFO) Cost Basis value is derived using the original share purchase price. Shares with the highest original purchase price redeem first.
Loss/Gain Utilization (LGUT) Selects the most advantageous shares to redeem to obtain desired gain or loss. Shares to redeem are identified by system calculation.
Last In First Out (LIFO) Cost Basis value is derived using the original share purchase price. Newest shares redeem first.
Specific Lot Identification (SLID) Cost Basis value is derived using the original share purchase price. Shareowner selects the shares they wish to redeem.
Low Cost First Out (LOFO) Cost Basis value is derived using the original share purchase price. Shares with the lowest original purchase price redeem first.

 
 
 
 
 
 
 
 
 
 
 
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