Attention Investors: Own Mutual Funds? Get Ready for Cost Basis Reporting Round 2

OMAHA, Neb.--(BUSINESS WIRE)--Remember those cost basis reporting changes from last year? Well, this year they go one step further. And TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation (NYSE: AMTD), wants to spread the word about how these new changes may impact its clients and other investors.

“Cost basis reporting is complicated and for that reason, we started educating clients about the new law back in 2010. With the introduction of mutual funds this year, we’ve expanded on that education and have enhanced our 1099 to simplify the 2012 tax filing process for our clients.”

The change stemmed from the Emergency Economic Stabilization Act of 2008, commonly referred to as the “bailout bill.” Mutual fund companies and brokerage firms like TD Ameritrade are required to report clients’ cost basis and holding period to the IRS on their Consolidated Form 1099s when covered securities are sold.

The new reporting requirements are being phased in over a four-year period and last year investors saw the first round of changes as the rule began to apply to equities acquired on or after Jan. 1, 2011. This year, the law will also apply to mutual funds acquired on or after Jan. 1, 2012.

The Details:

Here’s what investors should be aware of as they prepare their 2012 tax returns:

1. The regulation pertains only to IRS-covered securities in taxable accounts, not to IRAs and other non-taxable accounts.

2. The new reporting requirements are being phased in over a four-year period.

Equities, including foreign securities and American Depository Receipts (ADRs), acquired on or after Jan. 1, 2011
Regulated investment companies (RICs), like mutual funds, and equities acquired in connection with a dividend reinvestment program acquired on or after Jan. 1, 2012.
The law will apply to fixed income, options, warrants, and rights, purchased no sooner than Jan. 1, 2014.

3. Like last year, TD Ameritrade clients will see cost basis data on covered securities in the 1099-B section of their Consolidated Form 1099. However, this year the form has been redesigned to make it even easier for clients to understand and use.

4. Like last year, the IRS will require individual investors to report capital gains and losses on their personal tax returns by completing a Form 8949, which will list and summarize gain/loss transactions.

5. TD Ameritrade has created a service and support group within its investor service call centers, as well as dedicated cost basis reporting content on its website to help educate clients on what this change means for them. Since last year, TD Ameritrade has also expanded its external chat capabilities related to questions about tax filing.

Becky Groves, Director of Government Reporting at TD Ameritrade, said, “Cost basis reporting is complicated and for that reason, we started educating clients about the new law back in 2010. With the introduction of mutual funds this year, we’ve expanded on that education and have enhanced our 1099 to simplify the 2012 tax filing process for our clients.”

Investors seeking more information on changes in cost basis reporting are encouraged to visit TD Ameritrade’s website for more information, contact TD Ameritrade via phone at 800-669-3900, or speak with an Investment Consultant at any of the company’s 100+ branch locations.

TD Ameritrade does not provide tax advice. We suggest that you seek the advice of a qualified tax-planning professional with regard to your personal circumstances.

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About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how – bringing Wall Street to Main Street for more than 36 years. TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade’s newsroom or www.amtd.com for more information.

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