Changes to tax law for investors

Friends who buy stocks.

Make sure you check this out.

Introducing new cost basis reporting methods

A new federal law requires that brokerage firms and mutual fund companies report their customers’ cost basis, gain/loss, and holding period to the IRS on their Consolidated Form 1099s when securities are sold. Currently, firms such as TD AMERITRADE report only sale proceeds.

The goal is to help ensure the accurate reporting of gains and losses, and to simplify your year-end tax preparation.

This law will be implemented in phases over a three-year period, to cover Form 1099 reporting requirements to the IRS:

The law will apply to equities acquired on or after January 1, 2011 — excluding those acquired via a dividend reinvestment, or DRIP, program, and regulated investment companies (RIC stocks).
It will apply to mutual funds, RIC stocks and equities enrolled in DRIP acquired on or after January 1, 2012.
It will apply to new fixed income, options, warrants, rights, derivatives and commodities purchased after January 1, 2013.

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