Non-covered refers to the law change that details are not required in 1099-B for these stocks. Use short term or long term as the case may be and don't worry about the basis being reported or not.
In tax year 2011, new legislation was passed requiring brokers to report adjusted
basis and whether any gain or loss on a sale is classified as short-term or
long-term from the sale of covered securities on Form 1099-B. Covered just distinguishes the investments that must include this detail from those that do not, noncovered. An investment is considered covered if it is:
Shares of corporate stock acquired on or after
January 1, 2011.
Shares of stock in
mutual funds and stock acquired in connection with a dividend reinvestment plan
are generally not covered unless acquired after January 1, 2012.
Certain other types of
securities (e.g., debt instruments and options) will be covered if acquired
after January 1, 2014.
Non-covered securities are any
securities purchased or acquired before the above effective dates. Transactions involving assets purchased and
held prior to these effective dates can still be reported as they have
been in the past, meaning that brokers may not provide detailed cost basis reporting to the
IRS on the sales of "non-covered" securities. They may decide to report only your gross proceeds.
For these situations, it is your responsibility to report the
proper cost basis on
non-covered securities to the IRS. If you do not have this information, you can
still seek help from your broker, but it may be a little more difficult than
getting information for covered securities
