Yes, that may seem confusing, but the distinction is that when box E is used, the asset in question is a non-covered security.
A non-covered security is an SEC designation where the cost basis of securities may not be reported to the IRS. The adjusted cost basis of non-covered securities is only reported to the taxpayer, and not the IRS.
Assets are considered non-covered securities for a variety of reasons, including:
- The cost basis of securities is small and of limited scope.
- An investment in a Dividend Reinvestment Program (DRIP) that uses the average cost method of calculating the cost basis.
- Stocks sold by foreign intermediaries and foreigners.
- Assets purchased prior to 2011.
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