Instructions For Form 1099-B - 2018 (Page 9 of 11) in pdf

1. Any shares for which the acquisition date is

Initial basis. If a customer paid cash for a security, the

unknown.

initial basis is:

2. The shares that were acquired first, whether they

1. The total cash paid by the customer or credited

are covered or noncovered securities.

against the customer's account for the security, plus

2. The commissions and transfer taxes to buy the

Average basis method. Generally, the average basis

security.

method is available for either of the following types of

stock if the customer leaves the shares with a custodian

You may, but do not have to:

or agent in an account and acquires identical shares of

Take option premiums into account to determine the

stock at different prices in the account.

initial basis of securities acquired by exercising an option

Stock in most mutual funds or other regulated

granted or acquired before 2014, or

investment companies.

Increase initial basis for income recognized upon the

Stock acquired after 2010 in connection with a dividend

exercise of a compensatory option or the vesting or

reinvestment plan that meets the requirements of

exercise of other equity-based compensation

Regulations section 1.1012-1(e)(6).

arrangements granted or acquired before 2014.

Compute basis using the average basis method if:

You cannot increase initial basis for income recognized

The customer elects that method; or

upon the exercise of a compensatory option or the vesting

You choose the average basis method as your default

or exercise of other equity-based compensation

method, and the customer does not give you any other

arrangements, granted or acquired after 2013. For rules

instructions.

related to options granted or acquired after 2013, see

Generally, determine the average basis of a share of

Regulations section 1.6045-1(m).

stock by dividing the aggregate basis of all shares of

You must report the basis of identical stock by

identical stock in an account by the total number of

averaging the basis of each share if:

shares, regardless of holding period. However, for this

The stock was purchased at separate times on the

purpose, shares of stock in a dividend reinvestment plan

same calendar day in executing a single trade order, and

are not identical to shares of stock with the same CUSIP

The broker executing the trade provides a single

number that are not in a dividend reinvestment plan. The

confirmation to the customer that reports an aggregate

basis of each share of identical stock in the account is the

total price or an average price per share.

aggregate basis of all shares of that stock in the account

However, do not average the basis if the customer timely

divided by the aggregate number of shares. Unless a

notifies you in writing of an intent to determine basis by

single-account election is in effect, you may not average

the actual cost per share.

together the basis of identical stock held in separated

The initial basis of a security transferred to an account

accounts that is sold, exchanged, or otherwise disposed

is generally the basis reported on the transfer statement. If

of after December 31, 2011. See Regulations section

a transfer statement indicates that the security is acquired

1.1012-1(e) for details.

as a gift, you must apply the relevant basis rules for

Adjusted basis. The adjusted basis begins with the

property acquired by gift in determining the initial basis,

initial basis (defined next) as of the date the security is

except you do not have to adjust the basis for gift tax.

acquired into an account.

Treat the initial basis as equal to the gross proceeds from

the sale if:

In reporting the adjusted basis, take into account all

Neither gain nor loss is recognized because of the

information, other than the classification of the security

basis rules for gift property, or

(such as stock), reported on a transfer statement or issuer

The initial basis depends on FMV as of the date of the

return furnished to you or deemed furnished to you,

gift and you neither know nor can readily ascertain this

unless that statement or return is incomplete or you know

value.

it is incorrect. See

Transfer Statement

and

Issuer Returns

for Actions Affecting

Basis, earlier. Also, treat Form 2439

Short sales. In the case of a short sale, report the

as an issuer return and take into account the effects of

adjusted basis of the security delivered to close the short

undistributed capital gains reported to you on the form by

sale.

a regulated investment company or real estate investment

Wash sales. If a customer acquired securities that

trust.

caused a loss from a sale of other securities to be both

You are not required to consider other transactions,

nondeductible under section 1091 and the loss was

elections, or events occurring outside the account when

reported as a wash sale adjustment on a Form 1099-B for

determining basis.

the sale at a loss, increase the adjusted basis of the

You are also not required to apply section 1259

acquired securities by the amount of the disallowed loss.

(constructive sales), section 475 (mark-to-market method

Corporate mergers. Report only the net reduction in

of accounting), section 1296 (mark-to-market method of

basis between stock exchanged and stock received when

accounting for marketable stock in a passive foreign

reporting the payment of cash paid as part of a corporate

investment company), and section 1092 (straddles).

merger, reorganization, or similar event that is taxable

For a debt instrument, see Regulations sections

only to the extent that cash or property other than stock or

1.6045-1(n)(7) and 1.6045-1(n)(11) for the rules to

securities (“boot”) is received and for which no loss can be

determine adjusted basis for a debt instrument acquired at

recognized. Enter only the amount of the reduction

a premium or discount.

attributable to the amount reported in box 1d. Enter the

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Instructions for Form 1099-B (2018)

Instructions For Form 1099-B - 2018 Page 9

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