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rramsey3
New Member

What does "covered" and "noncovered mean in relation to reporting gains and losses to the IRS?

I got 5 pages of barter sales transactions and reporting gains and losses  requires me to indicate if each is covered or noncovered, what does covered and noncovered mean?
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2 Replies

What does "covered" and "noncovered mean in relation to reporting gains and losses to the IRS?

Covered cost basis means that your brokerage firm is responsible for reporting cost basis and sale information to the IRS. ... Noncovered cost basis means that your brokerage firm is NOT responsible for reporting cost basis information to the IRS and will only report the sales information.

KrisD15
Expert Alumni

What does "covered" and "noncovered mean in relation to reporting gains and losses to the IRS?

Covered shares are shares purchased after a certain date and the basis is required to be sent to the shareholder AND the IRS

 

Non-covered shares are shares purchased before a certain date and are reported in a previous reporting requirement where the basis is reported only to you, not to the IRS. The IRS is given the redemption amount. 

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