Cost basis reporting has changed the way Morgan Keegan reports trades to account holders and to the IRS. The changes authorized in The Emergency Economic Stabilization Act of 2008 became effective as of January 1, 2011, and it is important that you become familiar with the new regulations.
To meet the challenges of these additional reporting requirements, Morgan Keegan has enhanced our data systems to facilitate the matching of cost basis to buy and sale transactions. The IRS has issued final regulations affecting the following areas.
- For 2011 tax year, we will begin reporting to the IRS long/short-term gain/loss for each sale transaction on Form 1099-B. This will be phased in over a three-year period, affecting stock sales in 2011. Only stock purchased after 12/31/2010 will be subject to these additional reporting requirements.
- Wash sales of stock transactions made in the same account with the same CUSIP are now reportable as such for shares acquired after 12/31/2010. Deferred loss is a reportable item on Form 1099-B, and basis adjustments will be made as necessitated by the regulations.
- Stock short sale transactions are now reported in the tax year of the closing trade.
- In the year of the sale, gifted and inherited stock originally acquired after 12/31/2010 will now be identified as gifted or inherited on Form 1099-B, with long/short-term gain/loss reported in accordance with existing guidelines.
- In 2012, mutual funds and dividend reinvestment plans (DRP) will be subject to the new reporting requirements. All other securities will be phased in beginning in 2013.
If you have any questions regarding the new Cost Basis Reporting requirements and system, you may find the answer on our Basis Reporting Q&A page, or contact your Morgan Keegan financial advisor.
