Form 1099-B & Cost Basis Information

Redemptions or Exchanges of Mutual Fund Shares (Mailed in late January)

Form 1099-B is a record of the redemption proceeds from the sale or exchange of your fund shares (excluding money market funds). The form also includes any federal income tax that has been withheld according to IRS backup withholding requirements.

When you exchange shares of one fund for those of another, it is considered a sale and subsequent purchase, and must be reflected as such on your tax return. The information provided on this form is used to calculate any gain or loss on a redemption of fund shares.

Your cost basis is a record of any gains or losses from the sale or exchange of your fund shares.

When available, the cost basis on your Form 1099-B provides the information you need to determine gains or losses from redeemed or exchanged shares.

  Hover over the letters to get more information on each field.

Name and Address.

Recipient's Identification Number: Usually your Social Security Number (SSN) or Employer Identification Number (EIN).

Payer's Federal ID.

CUSIP Number: The CUSIP (Committee on Uniform Security Identification Procedure) number of your fund.

Type of Gain/Loss: Indicates short term or long term. Short term results from the sale of shares acquired one year ago or less. Long term results from the sale of shares acquired more than a year ago.

Quantity Sold: The number of shares sold or exchanged from your fund for which the proceeds are being reported.

Date Acquired: Shows the original acquisition date of the shares that were reported or sold. This box may be blank if non-covered security box is checked or if the securities sold were acquired on a variety of dates.

Date Sold or Disposed: The date(s) of each redemption or exchange.

Net Proceeds: This number represents the proceeds from each redemption or exchange of your fund shares, net of any contingent deferred sales charges (CDSC).

Cost Basis: Shows the cost basis of the securities sold.

Wash Sale Adjustments: Shows the amount of the nondeductible loss in a wash sale transaction.

Wash Sale Loss (if applicable, a "W" will appear in this column): A wash sale occurs if you sell your fund shares at a loss and, within 30 days before, after or on the day of that sale, you purchase additional shares in the same fund. Purchases include any dividend reinvestments.

Federal Income Tax Withheld: The amount of backup withholding from your redemptions and exchanges that was forwarded to the IRS under the backup withholding requirements.

Noncovered Security: If this box is checked, then the securities sold are noncovered. Generally, a mutual fund share purchased before 2012 is a noncovered security.

Gain or (Loss): The amount of the capital gain (loss).

Load Basis Deferral: A value in this box indicates that an adjustment was made to the cost basis amount.

Sales Load Basis Deferral Adjustment (if applicable, an "L" will appear in this column): This adjustment to net capital gain (loss) can occur when shares are sold within 90 days of their purchase and shares of the same fund or another fund are bought at a reduced sales charge due to the reinstatement privilege. A sales load basis deferral adjustment will cause an adjustment to the basis of the shares that have been sold and to the shares that have been purchased. The basis of the shares that were sold will not include the sales charge. The basis of the purchased shares will include the sales charge on the shares that were sold.

Your Questions Answered

As part of the Energy Improvement and Extension Act of 2008, mutual fund companies are required to report your cost basis information on IRS Form 1099-B for shares that are acquired and subsequently redeemed on or after Jan. 1, 2012. To learn more about the regulations, visit the Invesco Tax Center at invesco.com/us and click Mandatory Cost Basis Information.

The form design incorporates IRS requirements, including grouping transactions by fund, type of gain/loss and, for some boxes, total information.
Each fund reported may include up to five groupings:

  • 1. Short Term — Covered shares (cost basis will be reported to both the shareholder and the IRS)
  • 2. Short Term — Noncovered shares (cost basis will be reported to the shareholder, if available, and not reported to the IRS)
  • 3. Long Term — Covered shares (cost basis will be reported to both the shareholder and the IRS)
  • 4. Long Term — Noncovered shares (cost basis will be reported to the shareholder, if available, and not reported to the IRS)
  • 5. Unknown Shares — (No cost basis will be provided to the shareholder or IRS)

Many factors can prevent Invesco from providing cost basis information. If your account was originally an Invesco account opened before 1993, or the account received a transfer from an account ineligible for cost basis, then we are unable to provide cost basis information. This information is provided for your convenience in calculating gains or losses. You are not required to use the cost basis information we have provided to calculate gains or losses.

With this method, an average cost for all shares of a fund is calculated and maintained as separate amounts for your covered and noncovered shares.

A redemption may generate short- and/or long-term gains, or losses for both covered and noncovered shares since multiple purchases may be depleted by one transaction.

The following steps are used to calculate an average cost per share:

  • 1. Add up the total dollars that were used to purchase all of the shares currently owned.
  • 2. Divide the results of Step 1 by the number of shares currently owned. This yields an average basis per share.
  • 3. Multiply the results of Step 2 by the number of shares sold. This figure is the basis of the shares being sold.

Example: A shareholder redeems 50 shares of ABC Fund on Aug. 25, 2014, at a price of $17 per share. He has made two investments and had one capital gain reinvestment. His account information is as follows:

Trade Date Transaction Price per Share Number of Shares
01/03/10 Purchase $10 100 shares
12/15/10 Capital Gain $12 10 shares
01/02/11 Purchase $14 100 shares
  • 1. Find the shareholder's total cost by adding up all purchases (dividend and capital gain reinvestments included).

    Total Cost ($)
    $10 x 100 = $1,000
    $12 x 10 = $120
    Total: $2,520

  • 2. Divide the total cost by the number of shares owned.

    Average Basis Per Share
    100 + 10 + 100 = 210
    ($2,520 / 210 shares) = $12
  • 3. Multiply the average basis per share by the number of shares sold.

    Basis of Shares Sold
    ($12 x 50 shares) = $600

    We can see that the shareholder's cost using the average cost basis method is $600.

    From here, it's just a simple calculation to find his taxable gain/loss.

    Redemption Proceeds
    $17 x 50 shares sold $850
    Average Cost $600
    Taxable Gain $250

Because Invesco redeems shares on a first-in, first-out basis, we know that these shares were redeemed from the oldest purchase (lot) on Jan. 3, 2010. Since the redemption was placed on Aug. 25, 2014, we can conclude that the shareholder has incurred a long-term capital gain of $250.

Note: Although it may seem that the shareholder is taxed on reinvested dividends and capital gains for the year in which they were distributed as well as at the time the shares are redeemed, he/she is NOT double taxed on the assets. Because the IRS considers the reinvested dividends and capital gains income, the shareholder is taxed on them for the year in which they were distributed. In addition, at the time the shares are redeemed, the shareholder may be taxed on the gain resulting from the sell. The reinvested dividends and capital gains increase the shareholder's tax basis on the shares sold, thereby avoiding double taxation.

  • 1. First In, First Out (FIFO). Shares are sold in the order in which they were purchased — the oldest shares are sold first, and so on.
  • 2. Specific Identification. You specify which shares are to be sold first. This method can result in the lowest capital gain and the highest capital loss.
  • 3. High Cost (HIFO). Shares with the highest adjusted cost basis are sold first.
  • 4. Last-In, First-Out(LIFO). Shares of the fund are sold in the opposite order that they were acquired. The shares that were acquired most recently will be sold first.
  • 5. Low Cost (LOFO). Shares with the lowest adjusted cost basis are sold first.
  • 6. Loss/Gain Utilization. Evaluates losses per share and gains per share, and then strategically selects lots based on that loss/gain in conjunction with the holding period. This method will deplete shares with losses before gains. For shares that yield a loss, shares owned one year or less (short term) will be depleted ahead of shares owned more than one year (long term). For gains, long-term shares will be depleted ahead of short-term gains. With favorable long-term gains rates, long-term gains are given priority over short-term gains to reduce taxes assessed.

Please consult your tax advisor to determine which cost basis calculation method is most advantageous for your tax situation.

If you use the redemption proceeds provided on Form 1099-B, your CDSC has already reduced your redemption proceeds. Therefore, there is no need to adjust your cost basis.

State and local calculations of capital gains (losses) are usually the same as the federal calculations. However, your state or locality may have special rules that result in a different amount or treatment of gains (losses). To determine whether an adjustment is necessary, please read your state and local income tax form instructions or consult your tax advisor.

If you sell shares at a loss, and purchase any shares of the same fund within 30 days before, after or on the day of that sale, this is known as a wash sale. Tax regulations defer deduction of a loss on the sale to prevent investors from realizing losses solely to offset capital gains. The loss is added to the basisof the replacement shares purchased. The amount of the disallowed loss has been deducted from the amount shown in the Net Capital Gain (Loss) column for each transaction qualifying as a wash sale. Reinvested dividend and capital gain distributions are considered purchases by the IRS and are, therefore, capable of creating a wash sale.

It reduces the cost basis. For example, if your cost basis for shares of a fund is $10 per share and you have received a return of capital of $0.50 per share, your cost basis is reduced to $9.50 per share.

Normally, the amount of sales load paid when purchasing shares of a fund is added to the basis amount of the shares purchased. However, if you redeem the shares within 90 days after the date of purchase and acquire additional shares in the same fund or exchange into another fund under a reinstatement right, this may not be the case. The sales load may need to be deferred and added to the cost basis of the subsequently acquired shares. This cost basis statement does make the adjustment for you. Please consult your tax advisor regarding the effect this transaction may have on the average cost for this and subsequent transactions.

No. The cost basis of your account will be adjusted by the amount of the stock dividend. However, due to the reduction of the net asset value (NAV) at the time of the stock dividend, there is no effect on your gain/loss calculation. The example below shows cost basis information on a redemption without a stock dividend and on the same redemption with a stock dividend.

Without
Stock Dividend
With
Stock Dividend 2-for-1 Split
100 shares @ $10/share with an average cost of $5 200 shares (100 x 2) @ $5/share ($10/2) with an average cost of $2.50 ($5/2)
Redeem 100 shares @ $10/share = $1,000 Redeem 200 shares @ $5/share= $1,000
Gain of $500 (100 shares x $5) Gain of $500 (200 shares x $2.50)

A fund merger does not lower or raise your cost basis. After the merger is completed, the accounts are adjusted to reflect the new pricing without affecting your cost basis.