Investors & landlords
Proceed as follows. You must determine your holding period for any securities where the are considered 'noncovered'. If the securities have been held with Morgan Stanley the entire time you owned them, they may have reported to you the holding period and cost basis. If not, you will need to figure this out.
In 2008, Congress passed legislation which required brokers to report the cost basis for securities and mutual funds to both the investors and the Internal Revenue Service (IRS), effective tax year 2011
the difference between covered and noncovered shares is who keeps track of the cost basis.
- For covered shares, the financial organizations are required to report cost basis to both you and the IRS.
- For noncovered shares, the cost basis reporting is sent only to you.
When you enter your 1099-B transactions, you can choose to enter them yourself or import them. Either way you may have to review them to enter holding period and/or your cost basis. Keep in mind that reinvested dividends do add to your cost basis. The IRS always considers these sales as first in-first out unless you can show you selected designated shares.
Holding Period:
- Long term is a holding period of more than one year (one year plus one day) and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
- Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)
