Computershare recommends consulting with your tax advisor for information on cost basis and its impact to your specific situation.
Acquisition Date
Trade date of shares; can be an adjusted trade date based on wash sale trade date adjustments.
Adjusted Cost Basis
Represents the dollar cost of a share lot acquisition adjusted as necessary for fees, corporate actions, return of capital payments, reinvested dividends, wash sales and other processing with impact to cost basis.
Average Cost
Cost basis calculation method where the cost of all share lots is totaled and divided by the number of shares, all with the same CUSIP, in an account to determine the average cost per share. Generally this only applies to Mutual Fund shares.
Awaiting Cost Basis Status
Shares received from broker without cost basis [i.e. date/price]. Broker has 15 days to provide cost basis.
Cost Basis (also Tax Basis)
The original value of an asset for tax purposes (usually the purchase price), adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain.
Constructive Receipt
Transaction is reportable at the time of the effective date shareholder exchanges his/her shares.
Covered Securities / Covered Shares
Investments for which mandatory cost basis reporting is required under the legislation. The timeline for this is: Corporate Stock and plan shares acquired after 1/1/2011; mutual fund shares acquired after 1/1/2012; and all other securities acquired after 1/1/2013.
Double Category
At the time of sale or transfer, shares are aggregated by long term and short term holding periods and separate average costs are calculated for each aggregated group. The proposed regulations have eliminated this as a basis determination method.
Average Cost
The price that a given property or asset would be valued at in the marketplace.
Fair Market Value (FMV)
Cost basis calculation method where the first shares purchased in an account are the first shares sold from that account.
First In First Out (FIFO)
Ordering of disposition of shares must take holding period revisions for wash sale acquisitions into account.
Highest Price First Out (HIFO)
Cost basis calculation method where the shares with highest price purchased in an account are the first shares sold from that account.
Holding Period
The amount of time elapsed between the acquisition of shares and the disposal (i.e. sale or transfer) of the same shares.
Last In First Out (LIFO)
Cost basis calculation method where the last shares acquired in an account are the first shares sold from that account.
Long Term Gain / Loss
A gain or loss from a qualifying investment owned for longer than 12 months and then sold.The amount of an asset sale that counts toward a capital gain or loss is the difference between the sale value and the adjusted cost basis.
Lot (also Share Lot)
A group of shares associated with a single purchase/reinvest or transfer transaction.Shares in a lot share key dataelements such as acquisition date and share price, including basis adjustments.
Lowest Price First Out (LOWFO)
Cost basis calculation method where the shares with the lowest price acquired in an account are the first shares sold from that account.
Non-Constructive Receipt
Transaction is reportable in the tax year that the shareholder exchanges his/her shares and receives an actual payment.
Noncovered shares (Uncovered)
Shares obtained prior to cost basis timeframe for that class. [Example: Corporate Stock and plan shares acquired before 1/1/2011, mutual fund shares acquired before 1/1/2012, and all other securities acquired before 1/1/2013].
Return of Capital (ROC)
A distribution of capital that is not deemed by the issuer to be ordinary income. Return of Capital cost basis may be re-evaluated by the issuer months after a payment is made.
Short Term Gain / Loss
A gain or loss from a qualifying investment owned equal to or less than one year and then sold. The amount of an asset sale that counts toward a capital gain or loss is the difference between the sale value and the adjusted cost basis.
SIFMA
Securities Industry and Financial Markets Association.
Single Category Average Cost
At the time of sale or transfer, share lots are depleted using the FIFO method to determine long term and short term gains or losses.
Specific Lot Identification
Cost basis calculation method where the shareholder selects which share lots to sell or transfer when initiating a transaction and such selection is confirmed by the broker/agent to the shareholder in writing.
Wash Sale Rule (30-Day Wash-Sale Rule)
An Internal Revenue Service (IRS) rule prohibiting a taxpayer from claiming a loss on the sale of an investment when the same investment, or any portion of it, was purchased within 30 days before or after the sale date.
