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New 1099 Schwab Reports

Happy New Year! We hope you and your family had a wonderful holiday season.

With the New Year comes along new reporting from Schwab for taxable accounts. The purpose of this posting is to address some 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 to 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.

For tax year 2011, Schwab will report cost basis for equities acquired on or after January 1, 2011. Next year Schwab will report cost basis on mutual funds, ETFs, and dividend reinvestment plan (DRIP) shares acquired on or after January 1, 2012.

To help facilitate the reporting process and make your tax preparation easier, Schwab has redesigned its Form 1099 Composite to include cost basis and 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 cost basis for both covered and uncovered securities. Please note that cost basis 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 date in the Year-End Summary (formerly Account Summary) is now grouped by Form 1040 schedules. The summary includes a table of contents to help you locate information 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 not covered by the legislation

New Information in Year-End Summary

Realized gain/loss calculations

Summary of management fees

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

These reports will be arriving from Schwab starting in early February and will be mailed out in phases.

If you have any questions, please feel free to contact our office.

What Will You Remember From 2011?
A Perspective for the New Year

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