I am responding to the inquiry on Covered vs. Non-Covered shares.
I am a Fidelity Brokerage Account holder and have shares in a mutual fund that predate the rule where the Brokerage had to report cost basis to the IRS. Hence, When I sell a portion of my mutual fund i.e. One fund that was purchased before 2011, I know, it's FIFO so those older share will be sold.
I will get a 1099-B, which will show the sale, but the cost basis will be wrong. What I do us use the current cost basis for all of the other shares I hold post 2011, when the reporting to the IRS was mandated.
As an example, as of 3/2/2024, I have shares of contra fund with a 'cost basis' of $6.61 per share.
I have post 2011, where cost basis is reported. That being said I have 2 different cost basis on the tone fund and what I do when preparing my taxes, Turbo asks "Do you want to change the cost basis on this 1099-B'' which is for that one sale (Pre-2011). What I do is change the $6.61. to the current Cost Basis for all of the other lots I have which currently is 11.41 and then i'm done with that 1099 - B and the cost basis has been adjusted as if those lots were part of my post 2011 lots.
Because reporting did not have to happen post 2011, the cost basis for pre-2011 was never included in the cost basis adjustments by the Brokerage, therefore, it's up to the tax preparer and / or person owning the shares to 'be smart' and adjust accordingly, were the Brokerage Firm, (in this case Fidelity) left those lots unchanged.
I hope this is helpful.
Turbo Tax does handle this nicely !!
Billg02176
