1099s and Cost Basis Reporting
Posted by William Byrnes on December 1, 2010
The Energy Improvement and Extension Act of 2008 created new laws requiring most regulated securities transactions occurring after December 31, 2010 to be subject to cost basis reporting by securities brokers to the IRS.  Currently, brokers are required to report the gross proceeds from the sale of a security on Form 1099.  The new law will add reporting of client’s adjusted basis of the security, and whether the gain is a short or long-term.  Mutual fund cost basis reporting is to start a year after regulated securities reporting, and options and debt contracts are to follow a year after mutual funds. The reports are to be filed on a Form 1099-B, Proceeds from Broker and Barter Exchange. 
Why is it important to know that the IRS will be receiving information about the values of securities of clients? Read the entire article at AdvisorFYI.