We've created this web page to bring you up to speed on the changes to the new IRS tax reporting requirements and to explain how the changes might affect you.

The goal of the Emergency Economic Stabilization Act of 2008 is make sure that investors accurately report gains and losses of securities in their annual tax filings. This year will be the first time that custodians like Schwab will report cost basis information to the IRS, as well as to you, the taxpayer.

To help facilitate the reporting process and make tax preparation easier, Schwab has redesigned its Form 1099 Composite to include cost basis gain/loss information. Now the Year-End Summary, Form 1099-B and other 1099 forms you might receive will be consolidated into one report, which will indicate the cost basis information for both covered and uncovered securities. Please note that the cost basis information will be reported to the IRS only for covered securities, but Schwab is providing cost basis on uncovered securities as well, as a courtesy, because you are still required to report this information to the IRS.

The Form 1099 Composite has a new layout to allow for additional data fields. The data in the Year-End Summary (formerly, this was called the "Account Summary") is now grouped by Form 1040 schedules. The summary includes a table of contents to help you locate the information that you need.

 

 

New Information on Form 1099-B

  • Cost basis
  • Date the security was acquired
  • Holding periods- assets are grouped by short-term and long-term to make it easier to identify holding periods
  • Wash sale information
  • An indication if the cost basis provided is covered by the legislation
  • Realized gain or loss calculations
  • Summary of fees (Note: these are investment advisory fees only; planning fees will be reported sepearately by Barry Capital)

With all of your tax information sent in one report, you'll no longer receive a seperate Year-End Gain/Loss Report from Schwab.

If you have any questions, or would like to schedule time to review the new form and discuss the changes, please don't hesitate to call us and set up a time to talk.

Sincerly;

 

Barry Captial Management

 

 

Cost Basis Changes and How They Affect You (PDF)

Introducing Schwab's Form 1099 Composite (PDF)

Sample Form 1099 Composite (PDF)