Cost Basis Legislation – What You Should Know
Tax Statement Downloads
Cost Basis Legislation that took effect in 2011 requires Baird to report adjusted cost basis to the IRS on Form 1099-B (Gross Proceeds) when Covered securities are sold, redeemed or exchanged in taxable (i.e., reportable)1 accounts.For tax year 2014, the definition of Covered securities has been expanded to include simple debt2 and options purchased and sold in 2014 or thereafter. In addition, certain cost basis adjustments (e.g., market discount, bond premium and acquisition premium) for Covered debt instruments must be reported on the 2014 Forms 1099-INT, -OID and -B.
Cost basis and the applicable adjustments are an important part of accurately reporting capital gains and losses when filing tax returns since it directly impacts your taxable income. Your tax return(s) must reflect the amounts Baird reports on Forms 1099 since the IRS will compare your tax return to what is reported by Baird. You should reconcile any differences and provide supporting documentation accordingly.3
Please read the '2014 Cost Basis Legislation – What You Should Know' for additional information.
2014 Tax Documents
During the 2014 tax season, Baird will issue various tax documents to clients based on the type of account and the activity within the account. A hard copy of the applicable tax forms will be mailed via the United States Postal Service (USPS) to each client by the IRS due date.
|Tax Form||IRS Due Date|
|2014 Form 1099-R||February 2, 2015|
|2014 Form 1099-Q||February 2, 2015|
|2014 Tax Statement1
(see below for more information)
|Wave I: February 17, 2015
Wave II: March 16, 20153
|2014 Form 1097-BTC
|February 17, 2015|
|2014 Form 1042-S||March 16, 2015|
|2014 REMIC/WHMT Tax Statement||March 16, 2015|
|2014 Form 5498-ESA||April 30, 2015|
|2014 Form 5498||June 1, 2015|
The 2014 Tax Statements1 will be processed in two separate Waves (i.e., on two separate dates):
- Wave I will be mailed by February 17, 2015
- Wave II will be mailed by March 16, 20154
We anticipate the majority of 2014 Tax Statements will be mailed on or before February 17 (in Wave I) with the exception of accounts that held debt instruments. Also, certain accounts will be held and not mailed in Wave I if a select third party (e.g., exchange-traded fund, mutual fund, real estate investment trust and/or unit investment trust) has not provided their year-end tax information adjustments prior to the processing deadline date.
Any remaining accounts not mailed in Wave I, including accounts that held debt instruments, will be mailed in Wave II.
A 2014 Tax Statement will be issued if you received dividends or interest totaling in aggregate of at least $10 or if you received any gross proceeds.5
Convenient Access to Your Tax Documents.Baird offers clients convenient access to many of the tax documents issued in addition to mailing them through the USPS
- Baird OnLine – a PDF copy of your tax documents (any of the tax forms shown above) will be available on Baird Online several days before the copy is received in the mail. Note that you must have a Baird Online ID and password to access your tax forms. (Click here for additional information on registering for Baird Online.)
- TurboTax® – select tax forms (2014 Form 1099-R, 2014 Tax Statement1 and 2014 REMIC/WHMT Tax Statement) will be available to download into TurboTax®. (Click here for additional information about the TurboTax® download.)
- CSV File –you (and your tax preparer) can download the 2014 Tax Statement1 into a CSV (comma separated value) file when the tax document is received. The CSV file can then be electronically transferred into most professional tax accounting software, thus eliminating the majority of the manual data entry and saving considerable time for you and your tax preparer.
Please read Instructions to Download the Baird Tax Statement into a CSV file for additional information.
2Simple debt instruments acquired after January 1, 2014 are considered Covered securities. Simple debt includes instruments that provide for a single fixed payment schedule for which yield and maturity can be determined.
Complex debt instruments, which become Covered after January 1, 2016 includes: (a) stepped rate bonds, (b) convertible bonds, (c) stripped bonds or coupons including U.S. Treasury Strips, (d) bonds payable in a foreign currency, (e) tax credit bonds, (f) payment-in-kind bonds, (g) foreign-issued bonds, (h) bonds for which the term is unknown, (i) bonds held as part of an investment unit, (j) contingent payment bonds, (k) variable rate bonds and (l) inflation indexed bonds.
3There may be instances when the information you report to the IRS differs from the information reported by Baird. You must be familiar with tax return reporting rules and be able to verify the differences. Wash sales are an example of a transaction that may cause differences between information reported to the IRS by Baird. You are not allowed to claim losses when reporting wash sales, though the disallowed amount must be reported to the IRS. Baird will identify wash sales within a given account, but it is your responsibility to identify wash sales that are a result of trades within different accounts at Baird or other financial institutions where you hold accounts. All gains from wash sales are also reported.
5A 2014 Tax Statement will be issued if your taxable account meets or exceeds any of the IRS minimum thresholds as follows: (a) $10 or more of dividends, capital gain distributions, nondividend distributions, corporate interest, Treasury interest, tax-exempt interest/dividends, original issue discount, Treasury original issue discount, market discount or substitute payments, (b) $600 or more of any cash liquidation distributions, royalty distributions or other income distributions, (c) at least one gross proceeds transaction (d) any federal backup withholding, (e) any state withholding or (d) any foreign tax paid.