Cost Basis Resource Center

Cost basis reporting regulations require mutual fund companies like Federated to display redemptions of Covered shares (shares purchased after January 1, 2012) on 1099-B tax forms. Cost basis, cost basis reporting method, and gain/loss for each redemption are also noted.

Cost basis rules also require mutual funds to report Covered share redemption cost basis to the Internal Revenue Service (IRS). 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

Form 1099-B clearly indicates which of these categories is reported to the IRS. The tax laws assign different tax rates to these categories.  For your convenience, instead of displaying the total redemption transactions, Federated displays redeemed shares by category.  

While cost basis information will appear on Form 1099-B for Covered and Non-Covered shares, cost basis for Non-Covered shares (purchased prior to January 1, 2012) is not reported to the IRS.  Please consult a tax professional regarding your cost basis reporting and questions.

For more information, or to change your cost basis election, please contact one of our Client Service Representatives. They can help with your questions and send an informational cost basis statement on request.  

What is Cost Basis?

The purchase price of a mutual fund, less any sales charge, plus reinvested dividends and capital gains distributions.

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