TAX Center FAQ's!

In addition to the information reported on a Consolidated Form 1099 (shown at left), financial companies use the following forms to report income and securities transactions to the IRS:

• 1099-R
  Distributions from retirement plan accounts.
• 1099-Q
  Distributions from Coverdell Education Savings Accounts (ESAs).
• 1042-S
  Payments subject to withholding, such as interest, dividends, royalties, pensions, and annuities for nonresident aliens.
• 2439
  Undistributed long-term capital gains.
• 5498
  Individual contributions and rollover contributions to all IRAs (including SIMPLE and SEP IRAs), employer contributions, and rollovers on SIMPLE IRAs.
• 5498-ESA
  Contributions and rollover contributions made for you during the prior tax year for Coverdell ESAs. For more information about Coverdell ESAs, see IRS Publication 970, "Tax Benefits for Education."
• K-1
  Partner's share of income, credits, and deductions reported directly by the partnership.
  Note: If you are eligible to receive one or more of these other forms, they will be provided to you in separate mailings.

Yes, if you have received all your tax form documents, including those from other institutions, and you do not
detect any errors, you should be able to file your tax return. However, please be aware that certain investment instruments, such as mutual funds and Real Estate Investment Trusts (REITs), may reallocate payments (e.g.,from long-term capital gains to short-term capital gains) after the original 1099 has been issued. In addition, if you hold an investment instrument that is considered to be a Widely Held Fixed Investment Trust (WHFIT), there is a possibility of additional information being provided by the company, which may result in your receiving a corrected Consolidated 1099 Form. See Question 14 of this document for more information. Financial companies will send corrected forms to affected clients as soon as possible after any updated information is received.

Dividends subject to the capital gains rates, known as "Qualified Dividends," will be reported separately on Form 1099-DIV (Box 1b). However, although the dividend paid was classified as "Qualified," you must determine whether the dividend qualifies for the lower capital gains tax rate based on the time period in which you held the security. In general, for common stock, you must have held the stock for a period greater than 60 days during a 121-day period beginning 60 days before the ex-dividend date. For more information regarding your holding period, please consult your tax advisor.

Generally, yes. However, if you received income from a FDIC Insured Deposit Account or from Cash Account, it will be reported on Form 1099-INT rather than Form 1099-DIV.

Most dividends are reported by payable date. However, the IRS stipulates that certain securities, such as mutual funds and REITs, that declared a dividend in October, November, or December of 2011 with payable dates in January 2012, are reportable in tax year 2011. Conversely, if you received a dividend on a mutual fund or REIT in January 2011 with a declaration date in October, November, or December of 2010, that amount will not appear on your 2011 1099-DIV Form.

There are various scenarios for which you may have received a dividend charge to your account. For example, if you maintained a short position in your account and the company issued a dividend, this would result in a dividend charge. Dividend charges are not reflected on your 1099-DIV. Your monthly statement may be used as proof that a dividend charge has occurred. (If applicable, this information is also available in the Supplemental Information Section of your Consolidated 1099 Form.) You may be able to offset your dividend charges with dividend payments received on your tax return. Please consult with your tax advisor regarding your specific situation.

Dividend payments made to you by corporations, mutual funds, and REITs during the 2011 calendar year may be reclassified. The respective corporation or mutual fund company may have reclassified some or all of your dividend distributions as ROC or capital gains. If you think some of your dividends qualify as ROC or capital gains and your Consolidated 1099 Form is incorrect, please contact your Advisor to determine whether a corrected form should be mailed to you.

The IRS does not require brokerage firms to report options sales on the 1099-B. However, if applicable, your equity options transactions will appear in the Supplemental Information Section of your Consolidated 1099 Form. This section contains valuable tax-reporting information that is not provided to the IRS.

A Section 1256 Contract is any regulated futures contract, foreign currency contract, non-equity option, dealer equity option, or dealer securities futures contract. A Section 1256 Contract held at the end of the tax year will generally be treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss that results. The information on your 1099 form is what we are required to report to the IRS, and it can be used in determining that gain or loss.

When a company significantly changes its corporate structure, and the shares in the old company are exchanged for shares in the new company, the IRS requires the transaction to be reported as a sale as if you sold the old shares and bought the new shares.

The supplier is not required to furnish the information to us until March 15, 2012. Due to the timing, impacted clients may receive a corrected Consolidated 1099 Form showing the updated information in the Supplemental Information Section of the form.

The IRS requires that we report all sales on a trade-date basis on Form 1099-B. Consequently, sale transactions with a trade date in 2011 and a settlement date in 2012 will be reported on your 2011 Consolidated 1099 Form.

The IRS now requires that we report short sales once the position has been closed. Generally an open short sale will not be reported on the 1099-B unless the account is subject to federal backup withholding. If withholding occurs on a short sale, it will be reflected on the 1099-B so that you can claim the withholding when you file your tax return.

MLP information is reported on a separate K-1 Form by the partnership. The K-1 Form is mailed by April 17 by the MLP. If you have not received a K-1 from a particular partnership, please contact the partnership directly.

If applicable, MLP information will appear in the Supplemental Information Section on your Consolidated 1099 Form. This section contains valuable tax-reporting information that is not provided to the IRS.

No. It is not a reportable item. However, if applicable, it will appear in the Supplemental Information Section on your Consolidated 1099 Form. This section contains valuable tax-reporting information that is not provided to the IRS.

OID is the excess of a debt obligation's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). Whether or not you receive any cash payment during the year, we are still required to report any OID. You are required to recognize your accrued OID as it pertains to the number of bonds you own and the number of days you held the bonds during the year and continuing over the life of the obligation. Additional information can be found in IRS Publication 1212, "List of Original Issue Discount Instruments."

Please contact your financial company to report an error, or if you believe you should not have received a form because you are a nonresident alien for tax purposes.

Your 2011 Consolidated Form 1099 will reflect these changes. Cost basis for purchases of equities and other specified securities made on or after January 1, 2011, including adjusted cost basis, gross proceeds, and the holding period when certain securities are sold, must be reported to the IRS. If you have made short sales in your account, those will now be reported at the time of the buy to cover instead of the time of the sell to open. If you are subject  to backup withholding, your brokerage will likely withhold at the time of the short sale and will report the withholding on the 1099-B in the year it occurs.