To download the Tax Guide, please read the information below and then check the box to affirm that you have done so. The link to download the Tax Guide will then appear:

If you held a mutual fund, real estate investment trust (REIT), widely held fixed investment trust (WHFIT), widely held mortgage trust (WHMT) or unit investment trust (UIT) in 2013, we may send you a revised tax information statement. Please be aware that some issuers do not make their final distribution information available until after January. See the Dividends and Distributions section of the 2013 Tax Guide for more information.

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What's New for Tax and Cost Basis Reporting in 2013

For the 2013 tax season, you will receive your tax information statement, which includes the Form 1099, as early as possible. This year’s new phased mailing schedule is outlined below.

  1. New Mailing Dates for Your Tax Information Statement/Form 1099

    Depending on the holdings in your account, Pershing—which provides tax reporting services on behalf of your financial organization—will begin mailing tax information statements/Forms 1099 by January 31, 2014. Please refer to the information below for additional details:

    Phase Date Statement Mailing Details
    1 January 31 Form 1099 will be mailed for accounts with no pending income reclassifications from issuers. Generally, this includes accounts holding simple debt or equity-only investments.
    2 February 18* Form 1099 will be mailed for accounts for which income reclassifications were received after January 31. If you hold positions for which issuers have not provided final tax information, you will receive a special Pending 1099 Notice, which will identify the holdings impacting the mail date for your Form 1099 and the anticipated mail date of your Form 1099. If you have already received your Form 1099, you will not receive this notice.
    3 February 28 Form 1099 will be mailed for accounts for which income reclassifications were received after February 18. Generally, this includes mutual funds, unit investment trusts (UITs), real estate investment trusts (REITs) and certain equities.
    4 March 17* Form 1099 will be mailed for all remaining accounts, including those holding certain securities, such as real estate mortgage investment conduits (REMICs), widely held fixed investment trusts (WHFITs) and some UITs.
    * Pershing’s annual practice is to request and obtain an extension from the IRS for the February 15 date on which we are required to mail IRS Forms 1099 (B, DIV, INT, OID and MISC). In anticipation of obtaining this extension—and since February 15, 2014, falls on a Saturday and the President’s Day holiday is observed on Monday, February 17—this phase of the mailing will be completed by February 18. Pershing’s 30-day extension to the mailing requirement will accommodate this phase of the mailing. Since March 15 falls on a weekend, the mailing will be completed by the next business day of March 17.

    Corrected 1099 Forms Will Be Mailed as Needed

    You may receive a corrected tax information statement/Form 1099. There are several reasons this may occur—for example, if issuers of securities held in your account provide updated or additional information after your 1099 form is mailed to you. The IRS requires financial organizations to send corrected forms with revised information as needed. Please note that financial organizations, like Pershing, are responsible for Form 1099 reporting and must rely on issuers of securities for your tax information.

    Next Steps:
    No action is required. Your tax information statement/Form 1099 will be mailed as soon as it is available. For faster access, consider enrolling in electronic delivery (e-delivery). When you enroll in e-delivery, you can view your tax documents as soon as they are available. Contact your financial organization about your mail delivery preferences. View additional information on Going Paperless.

    Enhanced 1099 Form and Tax Information Statement

    Several enhancements have been made to your 2013 tax information statement, which includes the 2013 substitute Form 1099-B. To learn more about these changes, you can view our sample tax statement.

    Next Steps:
    If you have questions related to Form 1099 modifications, please consult your tax professional.

  2. What’s New for Cost Basis Reporting in 2013?

    For the 2013 tax season, cost basis reporting requirements still apply to stocks and mutual fund shares. When you file your federal income tax return, you are still required to provide the cost basis (including all gain and/or loss information) for all reportable (covered) investments disposed of by sale, exchange or redemption in your tax filing for the tax year in which the disposition occurs.

    Securities are considered “covered” if they are acquired on or after their applicable January 1 effective date, and “noncovered” if they are acquired before their covered effective date. As a general example, covered securities’ cost basis information will be reported to the IRS when sold, exchanged or redeemed, and noncovered securities and their cost basis information will not be reported to the IRS. Please note the following IRS timetable for cost basis reporting:

    • January 1, 2011— Stock in a corporation
    • January 1, 2012— Mutual fund shares, including eligible DRP shares and ETFs that are treated like mutual funds
    • January 1, 2014—Simple bonds and options
    • January 1, 2016—More complex debt instruments, including bonds with more than one rate, convertible bonds, stripped bonds or stripped coupons, payment-in-kind (PIK) bonds, foreign debt, foreign currency debt, some private issues and physical certificates

    Next Steps:
    Review what has changed for the 2013 tax season and cost basis changes for 2014 with your tax professional or advisor as soon as possible. If you would like additional information on cost basis changes, please visit irs.gov.

  3. New 2014 Tax Rules for Debt Instruments and Options

    If you hold simple covered debt instruments (e.g., bonds, where a yield can be easily calculated) or options, there will be important changes when you file your 2014 federal income tax return. Beginning January 1, 2014, the new tax rules require financial organizations to report the original or adjusted purchase price (cost basis) to you and the IRS when simple, covered debt instruments and options are sold, exchanged or redeemed. As a result, you will see these investments reported on your Form 1099-B for the 2014 tax year.

    Purchases of these instruments on or after January 1, 2014, will be deemed covered and reported to the IRS. As a result, financial organizations are required to accommodate your elections for the treatment of bond premiums and discounts. To add these elections with the proper IRS defaults, your investment account settings must be changed by you or by your properly authorized advisor.

    Next Steps:
    If you hold bonds, review your taxable bond holdings with your tax professional for 2014. Bonds contain unique provisions when calculating and reporting cost basis for federal income tax purposes. If your tax professional recommends different elections than the IRS defaults, contact your advisor to set up your investment account to comply with cost basis reporting requirements for 2014.

    Review the Default Account Election Changes Table below.

    View additional information in the 2013 Tax Guide.

    Default Account Election Changes as of January 1, 2014

    Election(s) Description
    Bond Premium
    (per U.S. Treasury regulations §1.171 and §1.171-4)
    This election allows you to amortize the premium on taxable bonds and apply the premium as an offset to interest income. The IRS instructed financial organizations to assume the investor has made this election. You can choose not to make this election and take the interest income at time of disposal.
    Current Inclusion
    (per U.S. Treasury regulation §1278[b])
    This election allows you to report accrued market discount annually as income and allows the financial organization to adjust the cost basis for the accruals. The default is to not report the market discount income annually.
    Constant Yield
    (per U.S. Treasury regulation §1276[b][2])
    This election allows you to use the constant yield method when calculating accruals. The default is to calculate market discount accruals using the ratable or straight line method.
    Original Issue Discount (OID)
    (per U.S. Treasury regulation §1.1272-3)
    This is an election to include gross income all interest that accrues on taxable bonds by using the constant yield method. The default is that the taxpayer has not made this election.

    Cost basis reporting requirements for more complex debt instruments become effective in 2016. Investments considered complex by the IRS include, but are not limited to, real estate mortgage investment conduits (REMICs), widely held fixed investment trusts (WHFITs) and unit investment trusts (UITs).

To learn more about any of the above topics, please download the 2013 Tax Guide.

This website is not intended to provide legal, tax, accounting or financial advice or services. We suggest that you consult your tax professional to discuss the appropriate federal, foreign, state and local tax treatment of your transactions. Any U.S. legal, tax, accounting or financial-related information contained in the 2013 Tax Guide, the Resources for Royalty Trust Tax Booklets or the Mutual Fund Supplemental Information was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in the Tax Guide, the Royalty Trust Tax Booklets or the Supplemental Information.

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The Mutual Fund Supplemental Information page will be available in March. Thank you for your patience.