Missing Info on Broker's 2014 1099-B (Scottrade)

David M. Owen on

Hi Laurie, In 2014 we sold off all of our Coach Inc stock
which was purchased in 2004 and 2005. During my audit it
was noted by my audit team that the sale was listed on our
1099-B as a "noncovered tax lot" under Long-Term
Transactions with no cost basis. Scottrade tells me that
the stock was purchased long enough ago that there is no
Cost Basis. There is concern with my auditors that this may
prove to be a problem with the IRS. Your advice on this
would be greatly appreciated. Louise Owen, Irvington
Investors

Laurie Frederiksen on

Hi Louise,

This is a question many people have.

Brokers do not report cost basis to the IRS in the Non-covered categories (Sections B and D).

That, however does not mean you do not have to report it correctly on your taxes.

If the cost basis information doesn't show on your 1099, you need to verify it in another way. If you've been with the same broker for a while, they may have a "Realized gain/loss" or "Closed Tax Lot" report you can get from them that you can use to do this.

If not, you'll need to use your monthly statements to confirm that all of the purchase and reorganization entries were made correctly in bivio. If they were, bivio will be calculating the correct gains and losses to report on your taxes.

Your stock has a cost basis, it just may be for the older shares that the broker doesn't have a record of what it was. That's why you've been keeping track of your stock in your bivio accounting!

Laurie Frederiksen
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On Wed, Feb 25, 2015 at 4:14 PM, David M. Owen via bivio.com wrote:

Hi Laurie, In 2014 we sold off all of our Coach Inc stock
which was purchased in 2004 and 2005. During my audit it
was noted by my audit team that the sale was listed on our
1099-B as a "noncovered tax lot" under Long-Term
Transactions with no cost basis. Scottrade tells me that
the stock was purchased long enough ago that there is no
Cost Basis. There is concern with my auditors that this may
prove to be a problem with the IRS. Your advice on this
would be greatly appreciated. Louise Owen, Irvington
Investors

Linda Wiltse on

For education purposes: A "covered" transaction is a stock purchased after a
certain date. I believe the date was 1/1/11 (not positive when the law went
into effect). Congress passed a law that brokers have to report cost basis
to the IRS for stocks purchased after that date. For mutual funds the cost
basis reporting started a year later, and now I believe options must be
reported on the 1099-B. For any items purchased before those dates the
broker only needs to report sale proceeds to the IRS on the 1099-B. On your
form you will see both covered and non-covered transactions. The totals for
various categories need to be reported on different lines of the Schedule D
and Form 8949 for individual tax returns.
The purpose of the law was to prevent cheating on tax returns by people
reporting the wrong cost basis on returns.
Brokers do not always have the cost basis of stocks and other securities.
If you move your investments from one firm to another, or if you purchased
stock directly from a company and transferred the stock, or if you have
inherited stock, your current broker may not have all the information. You
are still obligated to report the correct basis, regardless of whether the
broker reports it to the IRS.
Linda Wiltse

-----Original Message-----
From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of David M.
Owen via bivio.com
Sent: Wednesday, February 25, 2015 4:15 PM
To: club_cafe@bivio.com
Subject: [club_cafe] Missing Info on Broker's 2014 1099-B (Scottrade)

Hi Laurie, In 2014 we sold off all of our Coach Inc stock which was
purchased in 2004 and 2005. During my audit it was noted by my audit team
that the sale was listed on our 1099-B as a "noncovered tax lot" under
Long-Term Transactions with no cost basis. Scottrade tells me that the
stock was purchased long enough ago that there is no Cost Basis. There is
concern with my auditors that this may prove to be a problem with the IRS.
Your advice on this would be greatly appreciated. Louise Owen, Irvington
Investors

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