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How we report your cost basis information

You'll get a Form 1099-B with cost basis details for everything you sell. But only some of that information will be sent to the IRS.

Cost basis reporting: An overview

All sales of mutual funds, most exchange-traded funds (ETFs), and stocks will generate a Form 1099-B that provides detailed cost basis information to help you report capital gains and losses on your tax return.

Although we'll include details for sales of both covered shares and noncovered shares, only the cost basis information for sales of covered shares will be reported to the IRS. Cost basis for sales of noncovered shares will be reported solely to you.

For mutual fund accounts

Form 1099-B lists sales, exchanges, and redemptions (including checkwriting activity) from most nonretirement accounts.

For brokerage accounts

Form 1099-B reports sales, mergers, bond maturities, and aggregate profits or losses on regulated futures contracts.

What's reported for my mutual fund sales?

Here's a simple example of how cost basis information is reported to you—or to both you and the IRS:


Date shares purchased

INVESTOR A

June 1, 2010

INVESTOR B

January 20, 2014


Dates shares sold

INVESTOR A

October 1, 2014

INVESTOR B

October 1, 2014


Type of shares

INVESTOR A

Noncovered

INVESTOR B

Covered


Cost basis reported to …

INVESTOR A

Investor A only

INVESTOR B

Investor B and the IRS

You remain responsible for reporting your cost basis information to the IRS on Form 8949 and on Form 1040, Schedule D, for all shares sold, whether they're covered or noncovered.

For covered shares

The information you report in column (e) of Form 8949 must match what we send to the IRS on Form 1099-B. We aren't required to make certain adjustments that are necessary for your tax return. For example, we don't adjust basis for wash sales when the purchase or sale is in another account or for taxes paid on gifts. Pay close attention to the IRS instructions for Schedule D and Form 8949.

For noncovered shares

Vanguard only has average cost information, so you're responsible for your recordkeeping if you used another method.

For account transfers

Cost basis for account transfers involving bonds and options won't be reportable until tax year 2015 for less complex bonds and most options, and until tax year 2017 for more complex bonds and certain related options. We'll provide updates when the IRS publishes new forms and instructions.

REFERENCE CONTENT

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Form 1099-B

Form 1099-B reports all sales, exchanges, and redemptions (including checkwriting activity) from most nonretirement accounts.

For brokerage accounts, it includes sales, mergers, bond maturities, and aggregate profits or losses on regulated futures contracts.

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Covered shares

Shares bought and sold after the regulatory changes took effect on January 1, 2012 (or January 1, 2011, for stocks).

Cost basis reporting for covered shares will be sent to both you and the IRS.

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Noncovered shares

Shares bought before the regulatory changes took effect on January 1, 2012 (or January 1, 2011, for stocks).

Cost basis reporting for noncovered shares will be sent to you alone; it will not be sent to the IRS.