1. law, govt and politics
2. legal issues
3. legislation
4. tax laws

2013 Tax Handbook
A Comprehensive Handbook for Financial Organizations
Pershing LLC, its affiliates and its employees, may not provide legal, tax, accounting or financial advice or services. These materials and any tax-related
statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties.
Clients should contact their tax professional to discuss the appropriate federal, foreign, state and local tax treatment of transactions. This handbook
and the Tax Information Statement referenced herein are solely intended to assist in accumulating data to prepare income tax returns, and should not
be construed as tax advice. All amounts and transactions displayed in this handbook are for illustration only and do not represent actual transactions.
Accordingly, no guidance should be inferred as to any specific transaction from the illustrations in this handbook.
table of contents
What’s New for 2013 nonRetirement Products............ 3
Phased Mailing Schedule for 2013 Client Tax Reporting........................3
Cost Basis Reporting........................................................................................6
general information..............................................................................7
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT..............9
Pending 1099 Notice......................................................................................10
New for 2013: Table of Contents.................................................................. 11
Summary Section............................................................................................ 12
Proceeds from Broker and Barter Exchange Transactions....................14
IRS Form 8949 and IRS Form 1040, Schedule D..................................... 17
Regulated Futures Contracts........................................................................ 19
Foreign Currency Forward Contracts........................................................ 20
Interest Income................................................................................................ 21
Tax-Exempt Interest Income........................................................................ 22
Dividends and Distributions........................................................................ 22
Tax-Exempt Dividends.................................................................................. 23
Capital Gain Distributions............................................................................ 23
Liquidation Distributions.............................................................................. 24
OID..................................................................................................................... 24
Miscellaneous Income.................................................................................. 24
Transactions We Do Not Report to the IRS............................................. 25
Electronic Deposits........................................................................................ 29
Other Deposits................................................................................................ 29
Checking Activity........................................................................................... 29
Debit Card Activity........................................................................................ 29
Electronic Withdrawals................................................................................. 29
Other Withdrawals........................................................................................ 29
CDOs, CMOs and REMICs.......................................................................... 30
Additional Written Statement—CDOs
(Including REMICs)....................................................................................... 30
Additional Written Statement—WHFITs and WHMTs......................... 31
Supplemental Information—Royalty Trusts and HOLDRS Trusts...... 32
Revised Tax Summary Statement...............................................................33
IRS FORM 1099-B—PROCEEDS FROM BROKER AND
BARTER EXCHANGE TRANSACTIONS................................................... 34
IRS Form 1099-B............................................................................................. 34
irs form 1099-div—dividends and distributions................37
irs form 1099-int—interest income............................................ 38
irs form 1099-oid—original issue discount (OID)............. 39
irs form 1099-misc—miscellaneous income......................... 39
transactions pershing does not report to the irs..........40
mailing schedule..................................................................................... 41
reclassified income............................................................................... 42
correcting tax information statements.............................. 43
Service Center Requests............................................................................... 43
CD-ROM Requests—Additional Copies ................................................. 43
aCCounts exeMpt FroM tax reporting ................................... 45
FeDeral tax WithholDing (baCKup WithholDing) .......... 45
MiniMuM aMounts to be reporteD anD Due Dates........... 46
state/agenCY inForMation.............................................................. 47
irs ForM 1042-s—Foreign person’s u.s. sourCe
inCoMe subjeCt to WithholDing.................................................. 48
ForM 480.6—puerto riCo tax inForMation reporting............50
irs ForM 2439—notiCe to shareholDer oF
unDistributeD long-terM Capital gains................................. 52
txas—tax reporting sYsteM/teFra.............................................53
what’s new for 2013 retirement products....................58
GENERAL INFORMATION........................................................................... 59
IRS Form 1099-R Copy b and copy 2................................................. 61
Guide to IRS form 1099-R Distribution Codes........................ 63
IRS Form 1099-Q......................................................................................... 65
529 Plan Tax Information Reporting on
IRS Form 1099-Q......................................................................................... 66
Correcting Tax Information for IRS Form 1099-R
and IRS Form 1099-Q............................................................................... 67
IRS Form 5498.............................................................................................. 68
IRS Form 5498-ESA.................................................................................... 69
Correcting Tax Information For IRS Form 5498
and IRS Form 5498-ESA.......................................................................... 70
IRS Form 1099-R Name/TIN Mismatch Notices......................... 71
foreign distribution tax treatment.......................................... 71
foreign distribution tax treatment grids........................... 72
IRS Publication 515 and IRS Form 1042-s......................................73
IRS Form 990-T—Exempt Organization Business Income
Tax Return....................................................................................................74
FORM 5500 SCHEDULE C REPORTING.................................................. 78
FREQUENTLY ASKED QUESTIONS...................................................79
Nonretirement Product Tax Information
What’s New for 2013 nonRetirement Products
Phased Mailing Schedule for 2013 Client Tax Reporting
Ensuring your clients receive their tax forms as early as possible—with accurate information—is vital to providing exceptional service. As a result,
we are pleased to announce a phased mailing approach for IRS Form 1099 (B, DIV, INT, OID and MISC) tax statements for the 2013 tax year.
Pershing will evaluate each account and whether we have received final tax information for each security. We expect the new method will
significantly accelerate the issuance of original 1099 forms and reduce the incidence of publishing revised forms. Importantly, it will provide
greater transparency in the tax reporting process for both you and your clients.
The phased mailing schedule is outlined below. In addition, please refer to the Tax Season Overview communication (search key word “taxinfo” in NetX360®) for more information about the e-Document Suite™ 1099 posting schedule.
Mailing Phase
Mailing Event
Phase 1: January 31
Form 1099 Mailing
Form 1099 mailing will occur by January 31 for accounts with no income reclassifications pending from
issuers. Generally, this includes accounts holding simple debt or equity-only investments and options1.
1099 drafts will be available via e-Document Suite for accounts pending final reporting. The securities
pending 1099 reporting will be provided in the “waiting for data” section within the 1099 draft. The
drafts will be available to entitled advisors and will not be mailed to or viewable by your clients via
NetXInvestor™.
Phase 2: February 182
Form 1099 Mailing
Form 1099 mailing will occur by February 18 for accounts for which we can include previously pending
income reclassifications from issuers of mutual funds (regulated investment companies [RICs] and
exchange-traded funds [ETFs] treated as RICs), certain unit investment trusts (UITs), real estate investment
trusts (REITs) and certain equities, because the issuer or trustee has provided Pershing final tax information.
Generally, this includes accounts holding mutual funds with high incidences of reclassification1.
Pending 1099 Notice Mailing
A pending 1099 Item for Attention (IFA) will be populated, alerting you of the Pending 1099 Notice
(see the sample image on page 4) mailing for accounts for which we are awaiting data from issuers.
The notice will list investments that are awaiting information from issuers or trustees and indicate the
possible mail date of clients’ 1099s. This notice, which will be available in e-Document Suite, will be
mailed (even if enrolled in electronic delivery [e-delivery]) when issuers of taxable income are unable
to provide final tax information before February 18. This letter will identify the income impacting the
mail date.
Phase One 1099 drafts will be replaced with the most current 1099 draft information. The securities
pending 1099 reporting will be provided in the “waiting for data” section within the 1099 draft. The drafts
will be available to entitled advisors and will not be mailed to or viewable by your clients via NetXInvestor.
Revision Mailing for 1099s Sent in Phase One
- We will add the 1099 Draft IFA by Wednesday, February 12.
- We will add the 1099 Revisions IFA by Friday, February 14. Revision mailing for 1099s sent in Phase
One will be delivered by Friday, February 14.
3
Nonretirement Product Tax Information
What’s New for 2013 nonRetirement Products
Mailing Phase
Mailing Event
Phase 3: February 28
Form 1099 Mailing
Form 1099 mailing will occur by February 28 for accounts for which we can include previously
pending income reclassifications from issuers of mutual funds (RICs and ETFs treated as RICs), REITs
and certain equities, because the issuer or trustee has provided Pershing with final tax information.
Generally, this includes accounts holding mutual funds with high incidences of reclassification1.
A pending 1099 IFA will be populated for a second time, reduced to only the accounts that have not
received tax statements by the end of February. The securities pending 1099 reporting will be provided in
the “waiting for data” section within a current 1099 draft available in e-Document Suite. The drafts will be
available to entitled advisors and will not be mailed to or viewable by your clients via NetXInvestor.
Revision Mailing for 1099s Sent in Phases One and Two
- We will add the 1099 Draft IFA by Monday, February 24.
- We will add the 1099 Revisions IFA by Thursday, February 27. Revision mailing for 1099s sent in
Phases One and Two will be delivered by Friday, February 28.
Phase 4: March 173
Form 1099 Mailing
Form 1099 mailing will occur by March 17 for all remaining accounts, regardless of whether pending
income reclassifications for the account’s income have been received from issuers. Generally, this
includes accounts holding securities, such as REITs, certain equities, UITs, real estate mortgage
investment conduits (REMICs), widely held fixed investment trusts (WHFITs) and royalty trusts.
Revision Mailing for 1099s Sent in All Previous Phases
- We will add the 1099 Draft IFA by Thursday, March 13.
- We will add the 1099 Revisions IFA by Friday, March 14. Revision mailing for 1099s sent in all
previous phases will be delivered by Friday, March 14.
1
Holding only these types of securities does not guarantee that your clients’ tax statements will be mailed on the indicated date.
2
Pershing’s annual practice is to request and obtain an extension from the IRS for the February 15 date on which we are required to mail IRS Forms 1099 (B, DIV, INT, OID and MISC). In
anticipation of obtaining this extension—and since February 15, 2014, falls on a Saturday and the President’s Day holiday is observed on Monday, February 17—this phase of the mailing will
occur by February 18.
3
ershing’s 30-day extension to the mailing requirement will accommodate this phase of the mailing. Since March 15 falls on a weekend, the mailing will occur on the next business day
P
or March 17.
2013 PendIng 1099 noTIce
Account Number: 123-456789
As of 02/18/2014
PAYER INFORMATION:
Your Financial Advisor Is:
Name and Address:
PENDING 1099 Recipient’s
NOTICE
rOBerT ‘CONTACT’ ADVISOr
1234 STreeT has not yet been received for
We will alert your clients by February 18 when certain reporting information
JOHN Q. PUBLIC
BOX 1234
mailing (see sample below).
This
notice
will
list
investments
that
are
awaitingCAinformation
from issuers or
SOmewHere,
00000-0000
1234 TOwNLINe STreeT
IP: 123
APT. #1234
PerSHING LLC
Federal Identification
delivery
via a Pending 1099 Notice
Number: 13-2741729
trustees and indicate the possible
mail date of the client’s
1099.
SOmewHere, CA 00000-0000
SAMPLE NOTICE
Your 2013 IRS 1099 Tax Form(s) Are Pending Final Information
Pershing works closely with your financial organization to provide tax reporting for your account. Your 1099 form(s) will be mailed by February 28, 2014, or by
March 17, 2014, depending on when we receive final tax information from the issuers of the investments listed below. There is no further action required by you.
We will distribute your 1099 form(s) once the issuers have provided all of the required information.
CUSIP
Description
CUSIP
Description
CUSIP
Description
123ABC456
ABC FUND
123DEF456
DEF FUND
123JKL456
WHFIT
123MNO456
MNO FUND
123VWX456
VWX FUND
We look forward to providing your tax information as soon as it becomes available. If you have questions, please refer to the Tax Guide located on mytaxhandbook.com
for more information.
4
Nonretirement Product Tax Information
What’s New for 2013 nonRetirement Products
>BROKERAGE ACCOUNT STATEMENT MESSAGE
> TAX STATEMENT ENHANCEMENTS
A statement message was included in clients’ November
statement informing them of the 1099 tax statement mail dates:
There are several changes to the 1099/tax information statements
that provide a better experience for clients this tax season.
Please note the following information for Pershing’s 2013 IRS
Forms 1099 (B, DIV, INT, OID and MISC): Your form 1099 will be
delivered as early as possible, beginning January 31, 2014. By
February 18, you will receive either your 1099 form or a special
Pending 1099 Notice. The Pending 1099 Notice will be sent if
issuers of securities you hold have not yet provided their final
tax information. It will inform you of the securities that are
pending final reporting, and will provide the anticipated mail
date of your 1099 form. Your 1099 will be mailed no later than
March 17, 2014.
• N
ew Table of Contents page—For tax statements that are nine
pages or longer, we added a Table of Contents page to help with
navigation to 1099s and tax statement sections.
ew Advisory Fees Detail section—We added the transactional
• N
details of each individual fee that was charged to clients for the
year in the Advisory Fees Detail section.
• 1 099-B re-sort and separation of reportable and nonreportable
information section—The 1099-B summary section now only
displays reportable amounts. We more clearly separate and
disclose reportable and nonreportable proceeds and cost basis
information in the various summary and detail sections.
The following message will be included in January.
Important Reminder for Pershing’s 2013 IRS Forms 1099 (B, DIV,
INT, OID and MISC): As a reminder, by February 18, you will
receive either your 1099 form or a special Pending 1099 Notice.
The Pending 1099 Notice will be sent if issuers of securities
you hold have not yet provided their final tax information. It will
inform you of the securities that are pending final reporting,
and will provide the anticipated mail date of your 1099 form.
Your 1099 will be mailed no later than March 17, 2014.
• 1 099-B instructions section—Instruction text has been reduced
to streamline the statement, while still providing valuable
information. Certain information has been moved to our Tax
Guide and mytaxhandbook.com.
• 1 099-DIV section—We added the CUSIP® to the 1099-DIV
section. This additional information helps with research and
review of dividend information.
> NETX360 Enhancements
> REVISION PROCESS
• I tems for Attention (IFA)—During the phased mailing, we will
add a 1099 Draft IFA, which will be populated with drafts during
each revision cycle. You will be prompted to review the revision
drafts prior to mailing and can make an election to not mail the
revisions during that cycle if an issue is discovered. Previously,
this information was provided within the Revised 1099 IFA.
The Revised 1099 IFA will now only display your mailed
revisions. Please refer to page 4 for more information.
The first revision mailing for Form 1099 is planned for February 18, as
indicated on the mailing schedule on pages 3 and 4. By this date, we
plan to mail the first batch of revisions—which will report changes to
any tax statements mailed by January 31. Revisions will then occur by
February 28 and by March 17 to report corrections to tax statements
mailed in any of the previous mailings. After March 17, revisions will
be sent weekly.
Reviewing and Holding Revised Statements
You can view drafts of revised tax statements within e-Document
Suite the Monday prior to their mailing and have the opportunity
to review the accuracy of recent cost basis adjustments, as well as
other sensitive transactions. If additional adjustments are pending,
users can hold a revised tax statement mailing through TXAS-Tax
Reporting System/TEFRA (available in OpsCenter via NetX360)
until the next scheduled production print. This feature could
prevent multiple revisions being mailed to your clients. Refer to the
task reference called “Request a Delay of a Revised Tax Statement
(TXAS)” for more information.
We are also introducing the Pending 1099 IFA. It will be
populated by February 18 for accounts that receive the special
Pending 1099 Notice and for which tax statements were not
mailed by February 18. We will populate this IFA a second time
by February 28, reducing it to only the accounts that have not
received tax statements by the end of February.
• T
ax Statement Mailings Reports—A report is scheduled to
be available to help you track the various mailings, providing
information on the type of tax statement, how it was mailed
and how many accounts are waiting for data. The report will
also allow you to track how many initial and revised 1099s were
mailed in the various mailing phases. We will provide high-level
reasons for revisions and how many accounts received one or
multiple revised tax statements. We will also create an accountlevel report to provide you with lists of accounts and specific
reasons for each of the mailings.
Hold requests must be submitted by 8 p.m. (ET)/1 a.m. (GMT) on
February 25 for the February 28 mailing and March 11 for the March
17 mailing. When the weekly revision process begins, hold requests
must be submitted by 8 p.m. (ET)/1 a.m. (GMT) on Tuesdays.
Requests for Corrections
As a reminder, all 1099 correction requests should be submitted
via the correct path in Service Center:
-Form 1099-B cost basis inquiries: Other Products/Misc > Tax
Reporting > Cost Basis Reporting
-All other Form 1099 tax statement correction requests: Other
Products/Misc > Tax Reporting > Tax Information Statement
5
Nonretirement Product Tax Information
What’s New for 2013 nonRetirement Products
Cost Basis Reporting
>DEFAULT DEBT ELECTION CHANGES AS OF JANUARY 1, 2014
In 2013, cost basis regulations remain in effect for stocks and mutual
fund shares. In addition, your clients are required to provide the
cost basis (including all gain and/or loss information) for all covered
(reportable) and noncovered investments disposed of by sale,
exchange or redemption in their tax filing for the tax year in which
the disposition occurs.
Election
Description
Bond Premium
(per U.S. Treasury
regulations §1.171
and §1.171-4)
This election allows an investor to amortize the
premium on taxable bonds and apply the premium as
an offset to interest income. The IRS instructed financial
organizations to assume the investor has made this
election. An investor can choose not to make this
election and take the interest income at time of disposal.
For debt instruments, there are four taxpayer elections on how to
treat market premium and discount specified by the IRS that can
be used to properly set up your clients’ accounts. The following
methods can be used either as a select or default disposition
method. Please review the full list below:
Securities are generally considered covered under the cost basis rules
if they are acquired on or after their applicable January 1 effective date,
and noncovered if they are acquired before their covered effective date.
Please note the following IRS timetable for cost basis reporting:
• January 1, 2011—Stock in a corporation
• J anuary 1, 2012—Mutual fund shares, including eligible DRP
shares and ETFs that are treated like mutual funds
Current Inclusion
This election allows an investor to report accrued
(per U.S. Treasury
market discount annually as income and allows
regulation §1278[b]) the financial organization to adjust the cost basis
for the accruals. The default is to not report the
market discount income annually.
• January 1, 2014—Simple debt instruments (bonds) and options
• J anuary 1, 2016—More complex debt instruments, including bonds
with more than one rate, convertible bonds, stripped bonds or
stripped coupons, payment-in-kind (PIK) bonds, foreign debt,
foreign currency debt, some private issues and physical certificates
Constant Yield
(per U.S. Treasury
regulation
§1276 [b][2])
Please note: Transfer statement reporting for simple debt and options
is delayed to 2015. Transfer statement reporting for more complex
Original Issue
debt, including, but not limited to, REMICs, WHFITs and UITs, is
Discount (OID)
delayed until 2017.
(per U.S. Treasury
regulation
§1.1272-3)
>IMPORTANCE OF EARLY PLANNING—REVIEW BOND
ELECTIONS WITH YOUR CLIENTS BEFORE 2014 TAX SEASON
This election allows an investor to use the constant
yield method when calculating accruals. The default
is to calculate market discount accruals using the
ratable or straight line method.
This is an election to include in gross income all interest
that accrues on taxable bonds by using the constant
yield method. The default is that the taxpayer has not
made this election. Also, if an investor elects OID,
then an investor is also electing current inclusion and
constant yield for discount bonds and to amortize
taxable bond premiums.
Beginning January 1, 2014, the new tax rules require financial
organizations to report the original or adjusted purchase price
(cost basis) to investors and the IRS when debt instruments
deemed simple (e.g., bonds, where a yield can be easily calculated) > ENCOURAGE CLIENTS TO VISIT MYTAXHANDBOOK.COM
and options are sold, exchanged or redeemed. As a result, if your
FOR MORE TAX AND COST BASIS INFORMATION
clients hold these covered, simple debt instruments or options,
Pershing offers you and your clients free access to our
there will be important changes when they file their 2014 federal
comprehensive website, mytaxhandbook.com, which provides
income tax return. For the first time, your clients will see the cost
access to our Tax Guide and more information about tax and cost
basis of these investments reported as covered securities on their
basis reporting information. A sample of Pershing’s 1099 document
Form 1099-B for the 2014 tax year.
is also available. No login or registration is required to access the
information on the website.
Purchases of these instruments on or after January 1, 2014, will
be deemed covered and reported to the IRS. As a result, financial
organizations, including Pershing, are required to accommodate any
election made for the treatment of bond premiums and discounts.
To select these elections and override the IRS defaults, you can
update your clients’ investment account settings (if you are properly
authorized to do so). Clients should review the elections described
below with a tax professional, and provide instructions so you can
update the account as appropriate.
6
Nonretirement Product Tax Information
general information
>NEW FOR 2013: MULTIPLE TAX
INFORMATION STATEMENTS
–When stock is sold based upon the assignment of either a put or
a call option, the proceeds of that sale are adjusted by the price of
the option or the option premium. The proceeds are increased by
the option premium received or decreased by the option premium
paid. An adjustment code (O) will be displayed next to the
amount for an option premium within the Adjustment column.
The following important message will display within all Tax
Information Statements. To view message, please see sample
illustration on page 13.
IMPORTANT MESSAGE: We send tax statements when
information is finalized by securities issuers. If information is
pending from issuers, you and members of your household
may receive tax statement(s) at different times. Tax statement
mailings will occur by January 31, February 18, February 28 and
March 17, depending on when final information for your account
is received from issuers. If you have any questions, please visit
mytaxhandbook.com.
>PAYER
Pershing LLC is the payer of income reported on IRS Forms 1099-B,
1099-INT, 1099-DIV, 1099-OID and 1099-MISC.
>PAYER’S TAXPAYER IDENTIFICATION NUMBER (TIN)
The TIN (also called the Federal Identification Number) for
Pershing LLC is 13-2741729.
>TAX INFORMATION STATEMENT SUBSTITUTIONS
The statements may differ in any of the following situations:
Tax Information Statements are substitutes for the following
IRS forms:
–Tax classifications for income paid by mutual funds, REITs and
UITs are reported on the Tax Information Statement based on
information provided by the administrators of these companies
after year-end. Their post-year-end tax classifications often differ
from the classifications reported on monthly account statements.
IRS Information Return
IRS Form Name
1099-B
Proceeds from Broker and Barter
Exchange Transactions
–If a mutual fund (RIC and ETFs treated as RICs), or REIT declares 1099-INT
Interest Income
a dividend, interest or return of principal in October, November
1099-DIV
Dividends and Distributions
or December payable to shareholders of record on a date in
1099-OID
Original Issue Discount (OID)
one of those months but actually pays the distribution during
1099-MISC
Miscellaneous Income
January of the next calendar year, your clients are considered
to have received the dividend on December 31. We report the
>TRANSACTIONS PERSHING DOES NOT REPORT TO THE IRS
dividend in the year it was declared. These distributions are
Tax Information Statements also may include the following
referred to as “spillover dividends” and will not be reported again
transactions, which we do not report to the IRS:
on the following year Tax Information Statement.
– Municipal Original Issue Discount (OID)
–If a WHFIT or widely held mortgage trust (WHMT) declares
– Partnership Cash Distributions
an interest or return of principal in October, November or
– Partnership Redemptions Reported on IRS Schedule K-1s
December payable to shareholders of record on a date in one of
those months but actually pays the distribution during January
or February of the next calendar year, your clients are considered
to have received the dividend on December 31. We report the
distributions in the year it was declared. These distributions are
referred to as “spillover dividends” and will not be reported again
on the following calendar year Tax Information Statement.
–Advisory Fees
–Shortfalls
– Return of Principal Distributions
–Nonqualified Stated Interest
–Equity Options Transactions
–Tax Information Statements display trade activity based upon
trade date. Monthly account statements display trade activity
on a settlement-date basis.
– Short-term Discount Debt Instruments
–Interest income earned on REMICs is due to your clients by March
17. Income from REMICs is reported on an accrual basis when
earned—not when paid. Consequently, there may be differences
between interest income credited on account statements and
income reported on the Tax Information Statement.
–Accrued Interest Purchased
–Currency Transactions
– Securities Purchased
– Margin Interest Expense
>NEW CLIENTS
Tax Information Statements include activity since the date your
financial organization or your clients commenced doing business
with Pershing.
–Our tax reporting system, TXAS, uses Pershing’s Security Master
file to ensure the proper classification of income. External
vendors (for instance, Automatic Data Processing, Inc.®,
Bloomberg® Financial Services, Ernst & Young, Interactive Data
Corporation, J.J. Kenny Information Services, Lipper® Analytical
Services, Standard & Poor’s® and SunGard [Wall Street
Concepts]) are used to verify classification of income.
7
Nonretirement Product Tax Information
GENERAL INFORMATION
>ELECTRONIC DELIVERY OF ELIGIBLE TAX FORMS
of certain income and expenses for the WHFIT. The Additional
Written Statement, however, is provided only to your clients and is
not provided to the IRS.
Pershing continues to offer e-delivery of 1099 forms. Pershing
has a consolidated tax statement and reports information for
the following 1099 forms: B, DIV, INT, MISC and OID. Pershing’s
tax statement also includes other reportable and nonreportable
information as detailed in this handbook. Your clients can enroll
to receive their tax statements electronically, instead of receiving
paper copies of these documents. Only the noted 1099s, as part
of Pershing’s tax statement, are eligible for e-delivery. Pershing
issues other tax forms, such as IRS Form 1042-S, but those forms
are not approved for e-delivery by the IRS. Clients must self-enroll
in e-delivery of tax documents and that election remains in effect
until it is changed or revoked. When tax forms are available,
your client will receive an e-mail with a link to access his or her
document(s). If your clients receive 1099s electronically, their
Social Security number (SSN), individual taxpayer identification
number (ITIN), adoption taxpayer identification number (ATIN) or
employer identification number (EIN) will not be truncated. The
IRS does not allow for the truncation of these tax identification
numbers on 1099s that are delivered electronically.
Items of gross income attributable to the WHFIT for the calendar
year (including redemption and trust sales proceeds, non-pro rata
partial principal payments, redemption asset proceeds, sales asset
proceeds and all other amounts of income attributable to selling
or redeeming your interest in the WHFIT) are displayed on the
Additional Written Statement. Expenses, not included in Box 5 of
IRS Form 1099-DIV or 1099-INT, are displayed in the “investment
expenses” column of the Additional Written Statement.
>ROYALTY TRUSTS AND HOLDING COMPANY DEPOSITARY
RECEIPTS (HOLDRS®) TRUSTS
We are required to report certain additional information to your
clients regarding royalty and HOLDRS trusts. We provide this
information on a Supplemental Information Statement. Your clients
need this additional information to complete their tax returns.
Royalty trusts and HOLDRS trusts are considered nonmortgage
widely held fixed investment trusts (NMWHFITs) for federal
income tax purposes. These grantor trusts are subject to the
reporting requirements for WHFITs. The trustee of your client’s
royalty trust will provide tax information in accordance with the
applicable U.S. Treasury regulations governing the information
reporting requirements of the trust as a WHFIT or a NMWHFIT.
Links to tax information booklets for royalty trusts will be available
on mytaxhandbook.com when the booklets are made available by
the trusts.
>REPORTS AVAILABLE IN REPORT CENTER VIA NETX360
–IRS “B” Notice Reports (TXA997A1 and TXA997A2)
– Reasonable Cause Reports (TXA822R7 and TXA822R8)
– 1099 Revision Reports (BMO521A0 and BMO521A1)
– Waiting for Data Report (TXA840R0)
– Tax Statement Revision Summary Report (TXA125D0)
> TAX CALENDAR AND TAX REPORTING TOOL AND
RESOURCES PORTAL
>DOCUMENTS AVAILABLE VIA E-DOCUMENT SUITE
IN NETX360:
View important deadlines and events on Pershing’s tax calendar,
“Tax Reporting—Important Dates,” which has been updated with
2013 tax season dates. Available through the Tax Reporting Tools
and Resources portal in Resources via NetX360 (search key
word “tax-info”), the calendar is an additional resource to help
your firm track important tax season-related deadlines for
the month, quarter or year. You can use the calendar to see
operational deadlines and notifications from Pershing, as well
as IRS-driven deadlines.
–Original Tax Information Statements
– Duplicate copies
– Pending 1099 Notices
– Requested courtesy Tax Information Statements
– Puerto Rico Forms 480.6A, 480.6B, 480.6C, 480.6D
– 1042-S statements
–IRS Form 2439
The Tax Reporting Tools and Resources portal provides the latest
tax information and resources in one convenient location, including
links to communications, tax materials, training information,
webcasts and more.
–IRS First B Notice
–IRS Second B Notice
– Reasonable cause mailings
>WHOm TO CONTACT
–All revised Tax Information Statements
Our Tax Reporting Help Desk provides you with a centralized source
of information and assistance for tax reporting issues. For calls
originating in the United States, please call our toll-free number at
(800) 699-9965. Outside of the U.S., please call (201) 413-4200
and say, “Tax Reporting,” to be properly routed for assistance.
>WHFITS
We are required to provide details for items of gross income and
expenses reflected on Forms 1099 for WHFITs. UITs, royalty trusts,
mortgage-backed securities (MBSs) and commodity trusts are all
considered WHFITs. We provide this information on an Additional
Written Statement.
Please note: The help desk associates are not authorized to offer
tax advice.
Please note: This Additional Written Statement merely provides
details of amounts reported on IRS Form 1099.
Your clients need this additional information to complete their
tax returns. The Additional Written Statement provides details
8
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
We are required by the IRS to furnish the appropriate Forms 1099-B,
1099-DIV, 1099-INT, 1099-MISC and 1099-OID to your clients. The
amounts listed on our composite 1099 form represent dividends,
interest and other reportable payments made or credited to your
clients’ accounts. Pershing offers two versions—Your Tax Information
Statement (YTIS), the standard 1099 statement, and the Tax and YearEnd Statement (TYES), the premium version of our 1099 tax statement.
whether any loss is disallowed due to a wash sale for both
covered and noncovered securities transactions will be displayed
when available.
Please note: Such detail for noncovered transactions are not
reported to the IRS.
>CORESTONE ACCOUNTS®
For Corestone Account Gold and Platinum clients, the TYES also
includes up to 12 months (depending upon the time your client
was a Gold or Platinum client) of checking and debit card activity,
electronic deposits and electronic withdrawals.
>YOUR TAX INFORMATION STATEMENT (YTIS)
The YTIS is a composite substitute 1099 that contains the
same language as the official IRS Form(s), along with valuable
nonreportable transactions and information.
>TAX STATEMENT SAMPLE
>TAX AND YEAR-END STATEMENT (TYES)
A sample of the current year TYES is available within our Tax
Reporting Tools and Resources portal, available in Resources
via NetX360 (search keyword “tax-info”).
The TYES is a premium version of our composite 1099 statement
that includes both covered and noncovered transaction details
from your client’s schedule of realized gains and losses.
Below is a sample, cover page from the TYES.
In the event your client accounts are enrolled to receive the TYES,
the date of acquisition, cost or other basis, type of gain or loss and
2013 TAX AND
YEAR-END STATEMENT
Your Financial Advisor Is:
Recipient’s Name and Address:
ROBERT “CONTACT” ADVISOR
1234 STREET
BOX 1234
SOMEWHERE, CA 00000-0000
IP: 123
JOHN Q. PUBLIC
1234 TOWNLINE STREET
APT. #1234
SOMEWHERE, CA 00000-0000
ACCOUNT HOLDER INFORMATION:
ACCOUNT NUMBER: 123-456789
General Information
The following sources of must-have, year-end information are now at your fingertips:
n
Tax Summary (IRS Form 1099)—containing a detailed summary of your reportable and other nonreportable brokerage account transactions to assist with tax preparation
n
Asset Management Account Activity—listing checking, debit card and electronic transactions posted to your asset management account (excluding Silver accounts)
n
Cost Basis Service—featuring realized gains and losses for your investments
– Cost basis for noncovered securities has not been validated by Pershing and is not reported to the IRS
– Cost basis for bonds has been amortized or accreted using either yield to worst call or yield to maturity; this may not be how you have been reporting the bonds and should only be used as a guide. The original basis
has been provided to assist in calculating the correct deductions
– Wash sales have been calculated for both full and partial dispositions. For full dispositions, your net gain or loss will not change; the cost and holding period will be moved between tax lots
We hope you will find the information provided by these powerful tools helpful while preparing for the current tax-filing season.
For more information, please see the Tax Guide at mytaxhandbook.com.
Client Service Information
Contact Information
Client Service Information
Telephone Number: (999) 999-9999
Fax Number: (999) 999-9999
E-mail Address: [email protected]
Service Hours: Monday – Friday, 8 a.m. – 5 p.m. (ET)
Saturday, noon – 4 p.m. (ET)
Client Service Telephone Number: (999) 999-9999
Website: www.yourwebsite.com
To report a lost or stolen debit card or check, call (999) 999-9999, 24 hours a day, 7 days a week.
All amounts and transactions displayed in this sample Tax and Year-End Statement are for illustration only and do not represent actual transactions. Accordingly, no guidance should be inferred as to any specific
transaction from the illustrations in this sample Tax and Year-End Statement.
Page 1 of 1
9
SAM-STMT-TYE-8-13
SAM-STMT-TYE-12-13
Sample Statement
Making sense of your finances just got simpler—thanks to this consolidated tax and year-end summary.
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
>PENDING 1099 NOTICE
We will alert your clients by February 18 when certain reporting
information has not yet been received for delivery via a Pending
1099 Notice mailing (see sample below). This notice will list
investments that are awaiting information from issuers or trustees
and indicate the possible mail date of clients’ 1099 forms.
Frequently Asked Question:
May I see a preliminary 1099 prior to the actual mailing of
Tax Information Statement?
1099 draft statements will be made available via e-Document
Suite for all accounts prior to the phased mailing. Also, during
the phased mailing, 1099 drafts will be available for accounts
pending final reporting. The securities pending 1099 reporting
will be provided on a “waiting for data” page within the 1099
draft. The drafts will be available to entitled advisors and will not
be mailed to or viewable by your clients via NetXInvestor.
2013 PendIng 1099 noTIce
Account Number: 123-456789
As of 02/18/2014
Recipient’s Name and Address:
JOHN Q. PUBLIC
1234 TOwNLINe STreeT
APT. #1234
SOmewHere, CA 00000-0000
Your Financial Advisor Is:
PAYER INFORMATION:
rOBerT ‘CONTACT’ ADVISOr
1234 STreeT
BOX 1234
SOmewHere, CA 00000-0000
IP: 123
PerSHING LLC
Federal Identification
Number: 13-2741729
Pershing works closely with your financial organization to provide tax reporting for your account. Your 1099 form(s) will be mailed by February 28, 2014, or by
March 17, 2014, depending on when we receive final tax information from the issuers of the investments listed below. There is no further action required by you.
We will distribute your 1099 form(s) once the issuers have provided all of the required information.
CUSIP
Description
CUSIP
Description
CUSIP
Description
123ABC456
ABC FUND
123DEF456
DEF FUND
123JKL456
WHFIT
123MNO456
MNO FUND
123VWX456
VWX FUND
We look forward to providing your tax information as soon as it becomes available. If you have questions, please refer to the Tax Guide located on mytaxhandbook.com
for more information.
Page 1 of 1
10
LET-TYE-11-13
SAMPLE NOTICE
Your 2013 IRS 1099 Tax Form(s) Are Pending Final Information
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
>New FOR 2013: Table of Contents
For Tax Information Statements that are nine pages or longer, we added a Table of Contents page to help with navigation.
Account Number: 123-456789
2013 TAX AND
YEAR-END STATEMENT
As of 02/15/2014
Recipient’s Name and Address:
JOHN Q. PUBLIC
1234 TOWNLINE STREET
APT. #1234
SOMEWHERE, CA 00000-0000
Your Financial Advisor Is:
PAYER INFORMATION:
ROBERT “CONTACT” ADVISOR
1234 STREET
BOX 1234
SOMEWHERE, CA 00000-0000
IP: 123
PERSHING LLC
Table of Contents
Starting Page Number
Summary of Form 1099-B.............................................................................................................................................................................................................................................................................................................................................................1
1099-INT Form: Interest Income ...............................................................................................................................................................................................................................................................................................................................................1
1099-DIV Form: Dividends and Distributions...........................................................................................................................................................................................................................................................................................................................1
Summary of Form 1099-OID .......................................................................................................................................................................................................................................................................................................................................................1
1099-MISC Form: Miscellaneous Income..................................................................................................................................................................................................................................................................................................................................2
Summary of Transactions We Do Not Report to the IRS ......................................................................................................................................................................................................................................................................................................2
1099-B Forms: Proceeds From Broker and Barter Exchange Transactions .......................................................................................................................................................................................................................................................................4
Short-Term Covered Transactions .........................................................................................................................................................................................................................................................................................................................................4
Long-Term Covered Transactions..........................................................................................................................................................................................................................................................................................................................................4
Short-Term Noncovered Transactions ..................................................................................................................................................................................................................................................................................................................................5
Long-Term Noncovered Transactions ..................................................................................................................................................................................................................................................................................................................................5
Other Noncovered Transactions—No Holding Period .....................................................................................................................................................................................................................................................................................................6
Income Tax Withholding .........................................................................................................................................................................................................................................................................................................................................................8
Regulated Futures Contracts ..................................................................................................................................................................................................................................................................................................................................................9
Foreign Currency Forward Contracts .................................................................................................................................................................................................................................................................................................................................11
Interest Income (Details of Form 1099-INT) ..........................................................................................................................................................................................................................................................................................................................13
Tax-Exempt Interest (Details of Form 1099-INT) ...................................................................................................................................................................................................................................................................................................................15
Dividends and Distributions (Details of Form 1099-DIV)....................................................................................................................................................................................................................................................................................................16
Tax-Exempt Dividends (Details of Form 1099-DIV) ..............................................................................................................................................................................................................................................................................................................18
Capital Gain Distributions (Details of Form 1099-DIV)........................................................................................................................................................................................................................................................................................................18
Liquidation Distributions (Details of Form 1099-DIV) ..........................................................................................................................................................................................................................................................................................................19
1099-OID Forms: Original Issue Discount ..............................................................................................................................................................................................................................................................................................................................20
Miscellaneous Income (Details of Form 1099-MISC)...........................................................................................................................................................................................................................................................................................................21
Details for Transactions We Do Not Report to the IRS .......................................................................................................................................................................................................................................................................................................22
Non-Reportable Proceeds and Cost Basis Information ................................................................................................................................................................................................................................................................................................22
Municipal Original Issue Discount .....................................................................................................................................................................................................................................................................................................................................23
Non-Reportable Transactions ..............................................................................................................................................................................................................................................................................................................................................24
Advisory Fees ..........................................................................................................................................................................................................................................................................................................................................................................24
Electronic Deposits ................................................................................................................................................................................................................................................................................................................................................................25
Other Deposits .......................................................................................................................................................................................................................................................................................................................................................................25
Checking Activity ....................................................................................................................................................................................................................................................................................................................................................................25
Debit Card Activity .................................................................................................................................................................................................................................................................................................................................................................26
Electronic Withdrawals..........................................................................................................................................................................................................................................................................................................................................................26
Other Withdrawals .................................................................................................................................................................................................................................................................................................................................................................26
Additional Written Statement: Collateralized Debt Obligations.........................................................................................................................................................................................................................................................................................27
Additional Written Statement: Widely Held Mortgage Trusts (WHMTs) and Widely Held Fixed Investment Trusts (WHFITs)..........................................................................................................................................................................29
Royalty Trust and HOLDRS Trusts—Supplemental Information ........................................................................................................................................................................................................................................................................................30
Page 1 of 31
11
SAM-STMT-TYE-12-13
Sample Statement
This tax statement may include the following IRS forms: 1099-B, 1099-INT, 1099-DIV, 1099-MISC and 1099-OID. Only the forms that pertain to the activity
in this account are included in this tax statement. Please retain this document for tax preparation purposes.
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Summary Section
Appearing below the account profile information on the first page are
the following four summary sections:
The top section of the Tax Information Statement’s first page
provides the account profile information listed below. On all
subsequent pages of the Tax Information Statement, only the account
number, the recipient’s identification number and the first two lines
of the account registration appear. The account profile information
includes the following:
5.Summary of Form 1099-B
6.IRS Form 1099-DIV
7.IRS Form 1099-INT
8.Summary of Form 1099-OID
1.Client’s account number and tax identification number (provided the
account is documented); For clients receiving paper copies of the Tax
Information Statement, only a portion of their SSN will be displayed
The following are notices that may appear on the Tax
Information Statement:
2.Client’s name and address
9.An IRS message indicating that certain information is reported
to the IRS
3.Investment professional or registered investment advisor’s name,
address and telephone number
10.The page number relative to all pages of the Tax
Information Statement
4.Payer’s name and Federal Identification Number
11.The word “Various” is displayed in Box 10 (See page 14 for
further information)
1
2013 TAX AND
YEAR-END STATEMENT
Account Number: 123-456789
As of 02/15/2014
5
3
ROBERT “CONTACT” ADVISOR
1234 STREET
BOX 1234
SOMEWHERE, CA 00000-0000
IP: 123
6
Summary of Form 1099-B
Box
1
3
4
5
6
8
9
10
11/12/13
Interest Income
8
OMB No. 1545-0112
Amount
Interest Income ................................................................................................................... 14,297.03
Intersest on U.S. Savings Bonds and Treasury Obligations .........................................7,642.44
Federal Income Tax Withheld .............................................................. 4,200.00
Investment Expenses ....................................................................................................................0.00
Foreign Tax Paid.............................................................................................................................0.00
Tax-Exempt Interest...............................................................................................................3,000.00
Specified Private Activity Bond Interest ...............................................................................840.00
Tax-Exempt Bond CUSIP No................................................................................................. Various
State/State ID #/State Tax Withheld ........................................................ CA/123456789/810.00
Sample Statement
2013 1099-DIV
Box
1a
1b
2a
2b
2c
2d
3
4
5
6
8
9
10
11
12 /13/14
Amount
Gross Proceeds (For Covered and Noncovered Transactions) ......................................................12,348.78
Cost or Other Basis (For Covered Transactions) .................................................................................9,737.90
Federal Income Tax Withheld—Gross Proceeds ...................................................5,235.28
State Tax Withheld—Gross Proceeds ....................................................................................................... 948.82
Regulated Futures and Currency Forwards Contracts:
Profit or (Loss) Realized in 2013...............................................................................................................(411.38)
Unrealized Profit or (Loss) on Open Contracts—12/31/2012 ............................................................ 161.12
Unrealized Profit or (Loss) on Open Contracts—12/31/2013 ............................................................ 955.00
Aggregate Profit or (Loss)............................................................................................................................ 382.50
Federal Income Tax Withheld—Regulated Futures Contracts...............................................0.00
State Tax Withheld—Regulated Futures Contracts ......................................................................................0.00
2013 1099-INT
PERSHING LLC
Federal Identification
Number: 13-2741729
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other
sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.
Details are reported to the IRS. Refer to the 1099-B section of this statement for those details.
7
4
Dividends and Distributions
9
OMB No. 1545-0110
Amount
Total Ordinary Dividends.................................................................................................. 6,000.00
Qualified Dividends ............................................................................................................ 6,000.00
Total Capital Gain Distributions ...........................................................................................625.00
Unrecaptured Section 1250 Gain ....................................................................................... 175.00
Section 1202 Gain...................................................................................................................350.00
Collectibles (28%) Gain ............................................................................................................ 0.00
Nondividend Distributions ........................................................................................................ 0.00
Federal Income Tax Withheld ............................................................. 2,520.00
Investment Expenses .................................................................................................................. 0.00
Foreign Tax Paid.......................................................................................................................Various
Cash Liquidation Distributions ............................................................................................. 100.00
Noncash Liquidation Distributions ...........................................................................................0.00
Exempt Interest Dividends .................................................................................................3,000.00
Specified Private Activity Bond Interest Dividends .......................................................1,000.00
State/State ID #/State Tax Withheld ........................................................CA/123456789/630.00
Summary of Form 1099-OID
Details are reported to the IRS. Refer to the 1099-OID section of this statement for those details.
Amount
Original Issue Discount (Non-U.S. Treasury Obligations) ....................................................................52.45
Other Periodic Interest .................................................................................................................................. 0.00
Original Issue Discount on U.S. Treasury Obligations.............................................................................0.00
Investment Expenses ......................................................................................................................................0.00
Federal Income Tax Withheld ................................................................................ 14.68
State Tax Withheld ...........................................................................................................................................3.84
11
Page 1 of 31
12
10
SAM-STMT-TYE-12-13
2
JOHN Q. PUBLIC
1234 TOWNLINE STREET
APT. #1234
SOMEWHERE, CA 00000-0000
PAYER INFORMATION:
Your Financial Advisor Is:
Recipient’s Name and Address:
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Summary Section (continued)
13.The Summary of Transactions We Do Not Report to the IRS is
provided to your clients to help them prepare their tax returns.
12.Distributions reported on IRS Form 1099-MISC. Miscellaneous
Income includes substitute payments in lieu of dividends or
interest paid or credited. These amounts were allocated to an
account pursuant to IRS regulations and represent amounts
Pershing LLC received and paid as a result of the deemed transfer
of securities for use in a short sale.
14.Certain advisory fees charged to your clients’ accounts will be
summarized in this section if the account meets the enrollment
requirement as selected by your firm. This amount represents the
total amount for advisory fees charged during the tax year.
Royalties show income earned from royalty trusts. Other income,
such as substitute payment in lieu of dividends or interest,
should be reported as “Other Income” on your client’s tax return
IRS Form 1040.
Recipient’s Name and Address:
lease note: A summary of Equity Options Transactions and
P
Securities Purchased will be displayed in this section for accounts
that receive the YTIS.
15.These sections (beginning with Electronic Deposits Summary
through Other Withdrawals Summary) are a premium service.
See page 29 for more information.
Account Number: 123-456789
JOHN Q. PUBLIC
2013 TAX AND
YEAR-END STATEMENT
As of 02/15/2014
IMPORTANT MESSAGE: We send tax statements when information is finalized by securities issuers. If information is pending from issuers, you and members
of your household may receive tax statement(s) at different times. Tax statement mailings will occur by January 31, February 18, February 28 and March 17,
depending on when final information for your account is received from issuers. If you have any questions, please visit mytaxhandbook.com.
2013 Form 1099-MISC
Box
1
2
3
4
8
16
17
18
12 Miscellaneous Income
OMB-1545-0115
Amount
Rents .....................................................................................................................................................................................................................................................................................................................................................................3,000.00
Royalties ..................................................................................................................................................................................................................................................................................................................................................................000.00
Other Income .............................................................................................................................................................................................................................................................................................................................................................0.00
Federal Income Tax Withheld ......................................................................................................................................................................................................................................... 840.00
Substitute Payments in Lieu of Dividends or Interest ................................................................................................................................................................................................................................................................................... 25.00
State Tax Withheld ................................................................................................................................................................................................................................................................................................................................................210.00
State/Payer’s State Number .................................................................................................................................................................................................................................................................................................................. CA/123456789
State Income .................................................................................................................................................................................................................................................................................................................................................................
Sample Statement
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS
determines that it has not been reported.
13 Summary of Transactions We Do Not Report to the IRS (See instructions for additional information)
14
15
13
Amount
3,000.00
2,700.00
300.00
18,997.56
12,775.80
3,421.76
instructions for additional information) 3,000.00
0.00
0.00
Amount
13.75
240.48
254.23
420.00
Page 2 of 31
0.00
300.00
720.00
400.00
662.50
2,699.25
54,997.66
(3,299.69)
(9,162.98)
(4,898.25)
(28,750.00)
SAM-STMT-TYE-12-13
Non-Reportable Proceeds and Cost Basis Information
Short-Term Transactions Not Reported to the IRS on Form 1099-B (Informational Only)
Gross Proceeds
Cost or Other Basis
Realized Gain or Loss
Long-Term Transactions Not Reported to the IRS on Form 1099-B (Informational Only)
Gross Proceeds
Cost or Other Basis
Realized Gain or Loss
Other Transactions Not Reported to the IRS on Form 1099-B, Holding Period Unknown (Informational Only)
Gross Proceeds
Summary of Transactions We Do Not Report to the IRS (See
Cost or Other Basis
Realized Gain or Loss
Municipal Original Issue Discount
Original Issue Discount—Subject to Alternative Minimum Tax
Original Issue Discount—Not Subject to Alternative Minimum Tax
Total Municipal Original Issue Discount
Non-Reportable Transactions
Partnership Cash Distributions
Shortfalls
Return of Principal Distributions and Non-Qualified Stated Interest
Total Non-Reportable Transactions
Advisory Fees
Margin Interest Expense Charged to Your Account
Electronic Deposits Summary
Total Electronic Deposits
Other Deposits Summary
Total Other Deposits
Checking Activity Summary
Total Checking Activity
Debit Card Activity Summary
Total Debit Card Activity
Electronic Withdrawals Summary
Total Electronic Withdrawals
Other Withdrawals Summary
Total Other Withdrawals
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Proceeds from Broker and Barter Exchange Transactions
(Sales and Other Dispositions of Capital Assets) and IRS Form 1040,
Schedule D (Capital Gains and Losses). This box does not include
proceeds from regulated futures contracts or foreign currency
forward contracts. Please see the Instructions for Form 8949 for
exceptions to reporting each transaction on a separate row.
The Proceeds from Broker and Barter Exchange Transactions section
of the Tax Information Statement provides all of the following
information. To view the illustration, please see the next page.
1.Proceeds from broker and barter exchange transactions are
reported on IRS Form 1099-B-Proceeds From Broker and Barter
Exchange Transactions. These transactions include sales,
exchanges, redemptions, tender offers and maturities. Each
transaction in this section is reported to the IRS.
8.Cost or Other Basis (Box 3): This box shows the original cost or
adjusted cost basis due to a corporate action or acquisition by
inheritance or a gift. The IRS provides a detailed description of
cost or other basis reporting in the 2013 Instructions for Form
1099-B, which you can find at irs.gov. For additional information
about cost basis and its use during your tax preparation,
please refer to IRS instructions for Schedule D and Form 8949,
IRS Publication 550 (Investment Income and Expenses) and IRS
Publication 551 (Basis of Assets).
2.Covered securities transactions will be grouped and sorted by the
security CUSIP within the following two subsections:
–Short-Term Transactions for Which Basis Is Reported to the IRS—
Report on Form 8949, Part I, with Box A checked: Covered (Box 6b)
9.Adjustments: This column may display the following:
–Long-Term Transactions for Which Basis Is Reported to the IRS—
Report on Form 8949, Part II, with Box D checked: Covered (Box 6b)
W = Wash Sale Loss Disallowed (Box 5). An adjustment code
(W) will be displayed next to an amount for a disallowed wash
sale loss within the Adjustments column. This loss is being
reported as disallowed because the sale of the covered security
has been treated as a broker wash sale. This occurs when your
client re-purchases the identical security, as determined by CUSIP
number, in the same account within the 30-day period preceding
or following the date of the original loss. The wash sale loss is
reported as a positive amount as required by the IRS. For additional
information about wash sales, please refer to 2013 Instructions for
Schedule D (and Form 8949) and IRS Publication 550 (Investment
Income and Expenses).
3.For the TYES, noncovered securities transactions will be
grouped and sorted by the security CUSIP within the
following subsections:
–Short-Term Transactions for Which Basis Is Not Reported to
the IRS—Report on Form 8949, Part I, with Box B checked:
Noncovered (Box 6a)
–Long-Term Transactions for Which Basis Is Not Reported to
the IRS—Report on Form 8949, Part II, with Box E checked:
Noncovered (Box 6a)
–Transactions for Which Basis Is Not Reported to the IRS and
for Which Short- or Long-Term Determination Is Unknown
(to Broker)—Your client must determine short or long term
based on your records and report on Form 8949, Part I, with
Box B checked, or on Form 8949, Part II, with Box E checked, as
appropriate: Noncovered (Box 6a)
O = Option Premium. When stock is sold based upon the
assignment of either a put or a call option the proceeds of
that sale are adjusted by the price of the option or the option
premium. The proceeds amount is increased by the option
premium received or decreased by the option premium paid. An
adjustment code (O) will be displayed next to the amount for an
option premium within the Adjustment column.
Please note: The YTIS will display only the Transactions for
Which Basis Is Not Reported to the IRS and for Which Shortor Long-Term Determination is Unknown (to Broker) for
noncovered securities transactions.
For additional information about wash sales and option premium,
please see 2013 Instructions for Schedule D (and Form 8949) and
IRS Publication 550 (Investment Income and Expenses).
4.Quantity (Box 1e): The number of shares included in the sale or
exchange for the lot reported. If fractional shares are part of the
disposition, those shares will be displayed to three decimal places.
10.Realized Gain or (Loss): The realized gain or loss for the
transaction may be displayed. Note that the IRS does not
require the reporting of this information on the Form 1099-B.
This information is only provided if your firm subscribes to our
premium TYES.
5.Date of Acquisition (Box 1b): This box represents the date your
client acquired the security or, for short sales, the date your client
opened the short sale. You may see the word “Various” displayed
in this column if the disposition transaction includes multiple lots
with various acquisition dates.
11.Short sales are indicated with “Short Sale” displayed in the
Disposition Transaction section. Please see page 35 for more
information.
6.Date of Sale or Exchange (Box 1a): This box shows the trade date
of the sale or exchange. For short sales, the date shown is the
date your client closed the short sale.
12.Sale Date Total: If your client has multiple lots with the same sale
or exchange date, he or she may see a line item with “Sale Date
Total” noted in the “Disposition Transaction” column. The totals
provided in this line item are an aggregate of the lots listed above
the total line when the security and sale or exchange date are the
same. For these totals the word “Various” will be displayed in the
“Date of Acquisition” column, since the total includes multiple lots
with different acquisition dates. These total amounts are included
to help your clients complete IRS Form 8949.
7.Gross Proceeds—Less Commissions and Option Premiums (Box
2a): Gross proceeds from transactions involving stocks, bonds and
other debt obligations are reported in Box 2a. These amounts do
not reflect net profits and are net of transaction costs (for instance,
commissions and option premiums). Taxpayers generally report the
gross proceeds from each transaction separately on IRS Form 8949
14
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Proceeds from Broker and Barter Exchange Transactions (continued)
2013 Form 1099-B
1
PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
(For individuals, report details on Form 1040 Schedule D Line 1b, 2, 8b or 9)
OMB No. 1545-0715
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines
that it has not been reported.
4
Disposition
Transaction
Disposition
Method
Quantity
(Box 1e)
5
6
Date of
Acquisition
(Box 1b)
Date of Sale
or Exchange
(Box 1a)
8
Cost or
Other Basis
(Box 3)
9
Adjustments
W=Wash Sale Loss (Box 5)
O=Option Premium
10
Realized Gain
or (Loss)
Short-Term Transactions for Which Basis Is Reported to the IRS—Report on Form 8949, Part I, with Box A checked
Covered (Box 6b)
2
11
Description (Box 8): ABC Company
Sale
FIRST IN FIRST OUT
Short Sale FIRST IN FIRST OUT
100
200
CUSIP: 123456ABC
01/01/2013
01/02/2013
06/01/2013
06/02/2013
Short-Term Covered Total
Sample Statement
7
Gross Proceeds
Less Commissions
and Option
Premiums (Box 2a)
1,000.00
2,000.00
3,000.00
3,000.00
800.00
1,600.00
2,400.00
2,400.00
200.00
400.00
600.00
600.00
600.00
1,600.00
2,200.00
2,200.00
400.00
400.00
800.00
800.00
Long-Term Transactions for Which Basis Is Reported to the IRS—Report on Form 8949, Part II, with Box D checked
Covered (Box 6b)
12
3
Description (Box 8): ABC Company
Sale
FIRST IN FIRST OUT
Sale
FIRST IN FIRST OUT
Sale Date Total
Long-Term Covered Total
100
200
300
CUSIP: 123456ABC
01/01/2012
01/02/2012
Various
06/02/2013
06/02/2013
06/02/2013
1,000.00
2,000.00
3,000.00
3,000.00
Short-Term Transactions for Which Basis Is Not Reported to the IRS—Report on Form 8949, Part I, with Box B checked
Noncovered (Box 6a)
Description (Box 8): ABC Company
CUSIP: 123456ABC
Sale
FIRST IN FIRST OUT
100
12/15/2012
06/01/2013
1,000.00
1,200.00
Sale
FIRST IN FIRST OUT
200
12/16/2012
06/02/2013
2,000.00
1,600.00
200.00 W
400.00
0.00
3,000.00
2,800.00
400.00
400.00
1,600.00
2,000.00
2,000.00
600.00
400.00
1,000.00
1,000.00
Long-Term Transactions for Which Basis Is Not Reported to the IRS—Report on Form 8949, Part II, with Box E checked
Noncovered (Box 6a)
Description (Box 8): ABC Company
Sale
FIRST IN FIRST OUT
Sale
FIRST IN FIRST OUT
100
200
CUSIP: 123456ABC
01/01/2010
01/02/2010
06/01/2013
06/02/2013
Long-Term Noncovered Total
1,000.00
2,000.00
3,000.00
3,000.00
Transactions for Which Basis Is Not Reported to the IRS and for Which Short- or Long-Term Determination is Unknown (to Broker)—You must determine short or long term
based on your records and report on Form 8949, Part I, with Box B checked, or on Form 8949, Part II, with Box E checked, as appropriate
Noncovered (Box 6a)
Description (Box 8): ABC UIT
CUSIP: 123456ABC
Sale
FIRST IN FIRST OUT
100
06/01/2013
1,000.00
Sale
FIRST IN FIRST OUT
200
06/02/2013
2,000.00
3,000.00
Other Noncovered Total
3,000.00
15
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Proceeds from Broker and Barter Exchange Transactions (continued)
13.Income Tax Withholding—Gross Proceeds: If federal and/or state
income taxes were withheld from your proceeds amounts, they
will be reported and displayed in this section.
Sample Statement
–Quantity—This column is provided for reference purposes only
and is the total number of shares that may have been split and
reported in earlier 1099-B sections.
–Federal Income Tax Withheld (Box 4)—Reports federal income
tax withheld (backup withholding) as a payment on IRS Form
1040 (U.S. Individual Income Tax Return), line 62. Federal
income tax withheld is 28% of gross proceeds.
–State (Box 13)—This column displays the two-letter postal
abbreviation of the state(s) for which state income taxes are
being withheld.
–Disposition Transaction—This column is provided for reference
purposes only and will denote the type of transaction, for
example “SALE.”
–Proceeds—This amount is provided for reference purposes only and is the total proceeds amount for a sale or exchange. If a sale
or exchange included multiple lots, the proceeds amounts were
reported at the lot level in the appropriate 1099-B section.
Disposition
Transaction
13
Quantity
Proceeds
–State ID Number (Box 14)—This column displays the payer’s
state identification number.
–State Tax Withheld (Box 15)—This column displays the
amount of state income tax withheld.
Federal Income
Tax Withheld
(Box 4)
Date of Sale
or Exchange
State
(Box 13)
State ID Number
(Box 14)
State Tax
Withheld
(Box 15)
Income Tax Withholding—Gross Proceeds
Description (Box 8): ABC Company
Sale
300
Sale
600
CUSIP: 123456ABC
3,000.00
6,000.00
9,000.00
06/01/2013
06/02/2013
840.00
1,680.00
2,520.00
CA
CA
123456789
123456789
210.00
420.00
630.00
Description (Box 8): DEF FUND
Sale
Sale
CUSIP: 123456DEF
1,000.00
2,000.00
3,000.00
06/01/2013
06/02/2013
280.00
560.00
840.00
CA
CA
123456789
123456789
70.00
140.00
210.00
100
200
16
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Transactions generally must be reported separately on IRS Form 8949 and Form 1040, Schedule D, as either short term or long term, depending
upon the holding period. See the instructions to Form 8949 for exceptions to reporting each transaction separately in a row. Cost basis information
will be provided for covered securities transactions. These transactions should be itemized in Part I of Form 8949 for short-term transactions and
in Part II of Form 8949 for long-term transactions. Taxpayers should determine the cost or other basis for each transaction reflected on Form 8949
and Schedule D from their records for both covered and noncovered transactions. The sample statement on page 18 illustrates how this information
is reported on the Tax Information Statement, and the sample tax form, also on page 18, illustrates how to report the information on tax returns. See
the Instructions for Form 8949 for exceptions to reporting each transaction on a separate row.
IRS Form 8949 and IRS Form 1040, Schedule D
The IRS requires filers of Form 1099-B to sort the information within specific categories to assist your clients with the preparation of their
tax returns. The Pershing substitute 1099-B may have up to six separate sections. Please review the following, which summarizes this
important information:
–Short-term and long-term transactions are segregated in your clients’ 1099-B in a format comparable to IRS Form 8949, for dispositions
of covered securities.
–Noncovered securities transactions will also be displayed separately from covered securities transactions, and boxes 1b, 1c, 3 and 5 will be
left blank.*
–The 1099-B format will simplify your clients’ process of recording or transcribing each transaction from the 1099-B to IRS Form 8949.
* If your firm subscribes to our premium Tax and Year-End Statement, the date of acquisition, cost or other basis, type of gain or loss (long
term or short term), and whether any loss is disallowed due to a wash sale for both covered and noncovered securities transactions, will be
displayed when available. Please note: Such details for noncovered transactions are not reported to the IRS.
Below is a list of the six Form 1099-B sections and the corresponding information for Form 8949:
Form 1099-B Section
Corresponding Form 8949 Part and Box
1. Short-Term Transactions for Which Basis Is Reported to the IRS:
Covered (Box 6b)
1. Part I Short-Term Capital Gains and Losses—Assets Held One Year
or Less and Box (A)
2. Long-Term Transactions for Which Basis Is Reported to the IRS:
Covered (Box 6b)
2. Part II Long-Term Capital Gains and Losses—Assets Held More
Than One Year and Box (D)
3. Short-Term Transactions for Which Basis Is Not Reported to the
IRS: Noncovered (Box 6a)
3. Part I Short-Term Capital Gains and Losses—Assets Held One Year
or Less and Box (B)
4. Long-Term Transactions for Which Basis Is Not Reported to the
IRS: Noncovered (Box 6a)
4. Part II Long-Term Capital Gains and Losses—Assets Held More
Than One Year and Box (E)
5. Transactions for Which Basis Is Not Reported to the IRS and
for Which Short- or Long-Term Determination is Unknown
(to Broker): Noncovered (Box 6a)
5. Part I and Box (B) (Short-Term) or Part II and Box (E)
(Long-Term)—As appropriate
6. Withholding is reported to the IRS but not on Form 8949: Rather,
it is reported on line 62 of Form 1040
6. Income Tax Withholding—Gross Proceeds on Form 1099-B
Below is a list of the boxes on Form 1099-B, which will report information for covered securities transactions (and noncovered securities
transactions, as noted), and the corresponding columns on Form 8949:
Form 1099-B Section Corresponding Form 8949 Column
Box 1e—Quantity and Box 8 Description (a) Description of property
Box 1b—Date of Acquisition (b) Date acquired
Box 1a—Date of Sale or Exchange
(c) Date sold or disposed
Box 2a—Gross Proceeds (Less Commissions and Option Premiums)
(d) Proceeds
Box 3—Cost or Other Basis
(e) Cost or other basis
Box 5—Wash Sale Loss Wash Sale Loss Disallowed
(g) Adjustments to gain or loss and column (f) Code, if any,
for column (h)*
*E
nter the amount of the nondeductible loss as a positive number in column (g) and enter code W in column (f). Note that columns (h) and (f)
are also used for purposes other than wash sales. For more information about these columns, please see instructions for Form 8949, Sales and
Other Dispositions of Capital Assets.
The illustration on the following page provides a basic example of how to use the information reported on the 2013 Form 1099-B to complete
one or more IRS 8949 forms.
17
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
IRS Form 8949 and IRS Form 1040, Schedule D (continued)
The Form 1099-B example below provides illustrations of two covered short-term transactions. The third transaction provided in the
example is a short-term noncovered transaction. This noncovered transaction would be itemized on a separate Form 8949.
See the Instructions for Form 8949 for exceptions to reporting each transaction on a separate row.
2013 Form 1099-B
PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
OMB No. 1545-0715
(For individuals, report details on Form 1040 Schedule D Line 1b, 2, 8b or 9)
Sample Statement
8949
No. 1545-0074
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if OMB
this income
is taxable and the IRS determines
Form
that it has not
been reported.
▶ Information about Form 8949 and its separate instructions is at www.irs.gov/form8949.
Gross Proceeds
Department of the Treasury
Attachment
▶ File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Schedule D.
Date of
Date of Sale
Less Commissions
Cost or
Internal Revenue Service
Sequence
No. 12A
Adjustments
Disposition
Disposition
Quantity
Acquisition
or
Exchange
and
Option
Other
Basis identification
Realized Gain
W=Wash Sale
Loss (Box 5)
Name(s) shown on return
Social
security number
or taxpayer
number
O=Option Premium
Transaction
Method
(Box 1e)
(Box 1b)
(Box 1a)
Premiums (Box 2a)
(Box 3)
or (Loss)
1
2
Sales and Other Dispositions of Capital Assets
2013
Short-Term
Transactions
fortheir
Which
Is Reported
to the
IRS—Report
Form1099-B.
8949, Part
withmay
Boxprovide
A checked
Most
brokers issue
ownBasis
substitute
statement
instead
of usingonForm
TheyI,also
basis information (usually your cost) to you on
statement
even if it is not reported to the IRS. Before you check Box A, B, or C below, determine whether you received any statement(s) and, if so,
Covered the
(Box
6b)
the transactions for which basis was reported to the IRS. Brokers are required to report basis to the IRS for most stock you bought in 2011 or later.
Description (Box 8): ABC Company
CUSIP: 123456ABC
I IN FIRST
Short-Term.
Transactions
involving
you held one1,000.00
year or less are 800.00
short term. For long-term
Sale Part
FIRST
OUT
100
01/01/2013capital assets
06/01/2013
transactions,
see
Sale
FIRST IN FIRST
OUT
200 page 2.
01/02/2013
06/02/2013
2,000.00
1,600.00
Note. You may aggregate all short-term transactions reported on
Form(s) 1099-B
showing basis was
3,000.00
2,400.00
reported to the IRS and for which no adjustments or codes are required.
Enter 2,400.00
the total directly on
Short-Term Covered Total
3,000.00
Schedule D, line 1a; you are not required to report these transactions on Form 8949 (see instructions).
Short-Term Transactions for Which Basis Is Not Reported to the IRS—Report on Form 8949, Part I, with Box B checked
You(Box
must
Noncovered
6a)check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions,
complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page
Description
(Box
8):
Company
for one orABC
more
of the boxes, complete asCUSIP:
many123456ABC
forms with the same box checked as you need.
Sale
FIRST
FIRST OUT transactions
100 reported on
12/15/2012
1,000.00 to the IRS
1,200.00
(A)INShort-term
Form(s) 1099-B06/01/2013
showing basis was reported
(see Note above) 200.00 W
1,000.00
1,200.00
(B) Short-term transactions reported on Form(s) 1099-B showing basis was not
reported to the
IRS
Short-Term Noncovered
Total
1,000.00
1,200.00
(C) Short-term
transactions not reported to you on Form 1099-B
8949
Sales and Other Dispositions of Capital Assets
2013
Social security number or taxpayer identification number
Name(s) shown on return
Most brokers issue their own substitute statement instead of using Form 1099-B. They also may provide basis information (usually your cost) to you on
the statement even if it is not reported to the IRS. Before you check Box A, B, or C below, determine whether you received any statement(s) and, if so,
the transactions for which basis was reported to the IRS. Brokers are required to report basis to the IRS for most stock you bought in 2011 or later.
Part I
Short-Term. Transactions involving capital assets you held one year or less are short term. For long-term
transactions, see page 2.
Note. You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was
reported to the IRS and for which no adjustments or codes are required. Enter the total directly on
Schedule D, line 1a; you are not required to report these transactions on Form 8949 (see instructions).
You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions,
complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page
for one or more of the boxes, complete as many forms with the same box checked as you need.
X
(A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above)
(B) Short-term transactions reported on Form(s) 1099-B showing basis was not reported to the IRS
(C) Short-term transactions not reported to you on Form 1099-B
1
(a)
Description of property
(Example: 100 sh. XYZ Co.)
1
2
100 sh. ABC Company 200 sh. ABC Company (b)
Date acquired
(Mo., day, yr.)
(c)
Date sold or
disposed
(Mo., day, yr.)
(d)
Proceeds
(sales price)
(see instructions)
01/01/2013 06-01-2013
01/02/2013 06-02-2013
Adjustment, if any, to gain or loss.
If you enter an amount in column (g),
(e)
(h)
enter a code in column (f).
Cost or other basis.
Gain or (loss).
See the Note below See the separate instructions.
Subtract column (e)
and see Column (e)
from column (d) and
(f)
(g)
in the separate
combine the result
Code(s) from
instructions
with column (g)
Amount of
instructions
adjustment
1,000
2,000
800
1,600
200
400
2,400
600
2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract
negative amounts). Enter each total here and include on your
Schedule D, line 1b (if Box A above is checked), line 2 (if Box B
above is checked), or line 3 (if Box C above is checked) ▶
3,000
Note. If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an
adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment.
For Paperwork Reduction Act Notice, see your tax return instructions.
SCHEDULE
D
Capital Gains
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
▶
Form 8949 (2013)
OMB No. 1545-0074
Cat. No. 37768Z
and Losses
▶ Attach to Form 1040 or Form 1040NR.
Information about Schedule D and its separate instructions is at www.irs.gov/scheduled.
▶ Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10.
Part I
2013
Attachment
Sequence No. 12
Your social security number
Name(s) shown on return
Short-Term Capital Gains and Losses—Assets Held One Year or Less
See instructions for how to figure the amounts to enter on the
lines below.
This form may be easier to complete if you round off cents to
whole dollars.
1a Totals for all short-term transactions reported on Form
1099-B for which basis was reported to the IRS and for
which you have no adjustments (see instructions).
Add the amounts in columns (d), (e), (g), and (h) (subtract
2 Totals.
However,
if you choose to report all these transactions
negative amounts). Enter each total here and include on your
on Form
line isblank
and line
go to
Schedule
D, 8949,
line 1b leave
(if Box this
A above
checked),
2 (ifline
Box1b
B .
is checked),
or line 3 (if Box
C above on
is checked)
1babove
Totals
for all transactions
reported
Form(s) ▶8949 with
(d)
Proceeds
(sales price)
(e)
Cost
(or other basis)
(g)
Adjustments
to gain or loss from
Form(s) 8949, Part I,
line 2, column (g)
3,0002,400
(h) Gain or (loss)
Subtract column (e)
from column (d) and
combine the result with
column (g)
600
Note. Box
If youAchecked
checkedBox .A above
. . but
. the
. .basis
. reported
. . . to. the
. IRS
. was incorrect, enter in column (e) the basis as reported to the IRS, and enter an
adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment.
2 Totals for all transactions reported on Form(s) 8949 with
For Paperwork
Reduction. Act
Box B checked
. Notice,
. . .see. your
. tax
. .return
. . instructions.
. .
3 Totals for all transactions reported on Form(s) 8949 with
Box C checked . . . . . . . . . . . . .
18
Cat. No. 37768Z
0.00
0.00
0.00
Adjustment, if any, to gain or loss.
If you enter an amount in column (g),
(e)
(h)
enter a code in column (f). OMB No.
1545-0074
(d)
Cost or other basis.
Gain
or (loss).
(c)
(a)
(b)
Proceeds
See the Note below See the separate instructions.
Subtract column (e)
Date sold or
Form
Description of property
Date acquired
(sales price)
and see Column (e)
from column (d) and
disposed
(Example: 100 sh. XYZ Co.) ▶ Information
(Mo., day,
yr.) Form 8949 and its separate instructions is at www.irs.gov/form8949.
about
(f)
(g)
in the separate
combine the result
(Mo., day, yr.) (see instructions)
Department of the Treasury
Code(s)
▶ File with your Schedule D to list your transactions for lines 1b,
instructions
with column (g)
of Attachment
2, 3, 8b, 9, and
10 of from
ScheduleAmount
D.
Internal Revenue Service
instructions
adjustment Sequence No. 12A
1
Sample Tax form
200.00
400.00
600.00
600.00
Form 8949 (2013)
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Regulated Futures Contracts
7.The Unrealized Profit or (Loss) on Open Contracts—12/31/2013
subsection provides the details of contracts open at the end of
2013. Open contracts are marked to market as of December 31,
2013, to determine unrealized profit or (loss)(Box 11).
1.Regulated futures contracts and foreign currency forward contracts
are reported on IRS Form 1099-B.
2.The Profit or (Loss) Realized in 2013 subsection displays contracts
settled or closed during 2013.
8.The Aggregate Profit or (Loss)—Form 1099-B (Box 12) equals the
realized profit or loss adjusted for the unrealized profit or loss at
December 31, 2012, and December 31, 2013. Aggregate profit or
(loss) is calculated as follows:
Profit or (Loss) Realized in 2013
Less: Unrealized Profit or (Loss) on Open Contracts—12/31/2012
Plus: Unrealized Profit or (Loss) on Open Contracts—12/31/2013
3.Transactions are listed in CUSIP sequence. CUSIPs are displayed
below security descriptions.
4.The expiration date and strike price are displayed in the Expiration
Date/Strike Price column.
5.If any proceeds were subject to federal tax withholding, the
amount withheld is reported in the Federal Income Tax Withheld
(Box 4) column.
Please note: For more information, please refer to Pershing’s sample
TYES, which is available within the Tax Reporting Tools and Resources
portal in Resources in NetX360 (search keyword “tax-info”).
6.The Unrealized Profit or (Loss) on Open Contracts—12/31/2012
subsection provides the details of all contracts open at the end of
2012. Open contracts are marked to market as of December 31,
2012, to determine unrealized profit or (loss)(Box 10).
2013 TAX AND
YEAR-END STATEMENT
Account Number: 123-456789
Recipient’s Name and Address:
JOHN Q. PUBLIC
2013 Form 1099-B
1
As of 02/15/2014
REGULATED FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
OMB No. 1545-0715
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines
that it has not been reported.
REGULATED FUTURES CONTRACTS
4
Description
3
Expiration
Date/
Strike Price
PUT 100 S & P EXP 09-20-13 @ 975
500 INDEX
CUSIP: 12483B9IO
Closing Trade/
Process Date
Number of
Contracts
Buy/Sell/
Expire
Opening
Contract
Amount
Closing
Contract
Amount
03/15/2013
10
Sell
1,921.38
1,500.00
TOTAL
6
Description
State
ID Number
(Box 14)
State Tax
Withheld
(Box 15)
Federal
Income Tax
Withheld
(Box 4)
State
(Box 13)
State
ID Number
(Box 14)
State Tax
Withheld
(Box 15)
Federal
Income Tax
Withheld
(Box 4)
State
(Box 13)
State
ID Number
(Box 14)
State Tax
Withheld
(Box 15)
(421.38)
(421.38)
Expiration
Date/
Strike Price
Opening Trade
Date
Number of
Contracts
Long/Short
Opening
Contract
Amount
10
Long
1,921.38
Market Value
12/31/12
2,062.50
TOTAL
Unrealized
Profit/(Loss)
(Box 10)
141.12
141.12
UNREALIZED PROFIT OR (LOSS) ON OPEN CONTRACTS – 12/31/2013
Description
Expiration
Date/
Strike Price
PUT 100 S & P EXP 01-21-14 @ 415
100 INDEX
CUSIP: 7837909TC
8
State
(Box 13)
UNREALIZED PROFIT OR (LOSS) ON OPEN CONTRACTS – 12/31/2012
PUT 100 S & P EXP 03-19-13 @ 430 01/31/2012
100 INDEX
CUSIP: 7837909TF
7
Realized
Profit/(Loss)
(Box 9)
Federal
Income Tax
Withheld
(Box 4)
Opening Trade
Date
Number of
Contracts
Long/Short
Opening
Contract
Amount
12/11/2013
10
Short
3,000.00
Market Value
12/31/13
2,000.00
Unrealized
Profit/(Loss)
(Box 11)
(1,000.00)
TOTAL
(1,000.00)
Aggregate Profit or (Loss) – Form 1099-B; Box 12 (Individuals report on Form 6781, line 1, column b)
(1,562.50)
Page 9 of 31
19
SAM-STMT-TYE-12-13
Sample statement
5
PROFIT OR (LOSS) REALIZED IN 2013
2
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Foreign Currency Forward Contracts
9.Foreign Currency Forward Contracts—Brokers are not required to
file with the IRS returns of information (on Forms 1099-B) with
respect to a sale of foreign currency pursuant to a market order.
A market order is an order to buy or sell an investment immediately
at the best available current price and does not include a “forward
contract” or a regulated futures contract. In the foreign currency
market, delivery is typically made on a market order within two
business days and is a nonreportable “spot contract” for tax
purposes to distinguish it from a “forward contract.” A purchase
or sale of foreign currency that requires delivery or settlement on
a date that is more than two business days from the date of the
contract, or is set at a price that is other than the current market
price, should not be a market order transaction and is reportable as
a “forward contract.” Accordingly, this section reports only foreign
currency forward contract activity for 2013.
2013 Form 1099-B
9
10.Combined Totals for Regulated Futures and Foreign Currency
Forward Contracts—If your client has reportable activity for both
a Regulated Futures and Foreign Currency Forward Contracts,
your client will receive combined totals above for boxes 9, 10, 11
and 12. These totals will be reported to the IRS.
Please note: For more information, please refer to Pershing’s sample
TYES, which is available via the Tax Reporting Tools and Resources
portal in Resources in NetX360 (search keyword “tax-info”).
REGULATED FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
OMB No. 1545-0715
FOREIGN CURRENCY FORWARD CONTRACTS
PROFIT OR (LOSS) REALIZED IN 2013
Currency
EUROS
CUSIP: EUR999995
Buy/
Sell
Trade
Date
Settlement
Date
Currency
Buy/Sell Amount
Trade Date
Exchange Rate
USD
Buy/Sell Amount
Settlement Date
Exchange Rate
USD Settlement
Date Amount
Realized Profit/
(Loss) (Box 9)
Buy
04/27/2013
05/05/13
100.00
1.30
130.00
1.40
140.00
10.00
Sample Statement
TOTAL
10.00
UNREALIZED PROFIT OR (LOSS)—12/31/2012
Currency
EUROS
CUSIP: EUR999995
Buy/
Sell
Trade
Date
Settlement
Date
Currency
Buy/Sell Amount
Trade Date
Exchange Rate
USD
Buy/Sell Amount
12/31/2012
Exchange Rate
12/31/2012
Market Value
Unrealized Profit/
(Loss) (Box 10)
Buy
04/27/2012
05/05/13
200.00
1.25
250.00
1.35
270.00
20.00
TOTAL
20.00
UNREALIZED PROFIT OR (LOSS)—12/31/2013
Currency
EUROS
CUSIP: EUR999995
10
Buy/
Sell
Trade
Date
Settlement
Date
Currency
Buy/Sell Amount
Trade Date
Exchange Rate
USD
Buy/Sell Amount
Buy
04/27/2013
05/05/14
300.00
1.30
390.00
12/31/2013
Exchange Rate
1.45
12/31/2013
Market Value
435.00
Unrealized Profit/
(Loss) (Box 11)
45.00
TOTAL
45.00
Aggregate Profit or (Loss)—Form 1099-B; Box 12 (Report on Form 1040 according to applicable rules)
35.00
COMBINED TOTALS FOR REGULATED FUTURES CONTRACTS AND CURRENCY FORWARDS
PROFIT OR (LOSS) REALIZED IN 2013 (Box 9)
UNREALIZED PROFIT OR (LOSS)—12/31/2012 (Box 10)
UNREALIZED PROFIT OR (LOSS)—12/31/2013 (Box 11)
Aggregate Profit or (Loss)—Box 12
>PROFIT OR (LOSS) REALIZED IN 2013
The Profit or (Loss) Realized in 2013 subsection is displayed in this
section (in the order displayed above): the currency, whether the
exchange was a buy or sell of foreign currency, the trade date, the
settlement date, the foreign currency amount bought or sold, the
trade date exchange rate to or from U.S. dollar (USD), the USD
equivalent buy or sell amount, the settlement date USD exchange
rate, the settlement date USD equivalent for the buy or sell and
the realized profit or loss in 2013. The realized profit or loss in this
section is the difference between the USD buy/sell amount (trade
date) and the USD settlement date amount.
(411.38)
161.12
955.00
382.50
>UNREALIZED PROFIT OR (LOSS) ON OPEN
CONTRACTS—12/31/2012 and 12/31/2013
The Unrealized Profit or (Loss) on Open Contracts—12/31/2012
and 12/31/2013 subsections are displayed in these sections (in
the order displayed above): the currency, whether the exchange
was a buy or sell of foreign currency, the trade date, the settlement
date, the foreign currency amount bought or sold, the trade
date exchange rate to or from USD, the USD equivalent buy or
sell amount, the USD exchange rate on December 31, the USD
equivalent buy or sell amount on December 31 and the unrealized
profit or loss. The unrealized profit or loss in these sections is
the difference between the USD buy/sell amount (trade date) and
the December 31 market value amount. Please see illustration on
page 19 and refer to boxes 2, 6, 7 and 8. That same information
applies to boxes 9, 10, 11 and 12 in the currency forwards section.
20
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Interest Income
1.Interest income is reported on IRS Form 1099-INT. Details are
displayed on Tax Information Statements to provide your clients
with transaction-level information.
5.If any income was subject to federal tax withholding, the
amount withheld is reported in the Federal Income Tax Withheld
(Box 4) column.
2.Transactions for each security are classified by CUSIP/Security Type.
6.Your clients may deduct investment expenses (Box 5), subject to
the 2% limit, from single-class REMICs and UITs as other expenses
on IRS Form 1040, Schedule A. Your client’s share of WHFIT and
WHMT expenses is also reported in Box 5.
3.Transactions are listed in CUSIP sequence.
4.Separate subtotals are reported in three categories for interest
earned (if applicable): U.S. corporations, foreign corporations, U.S.
government agencies and tax-exempt interest from tax-exempt
bonds, mutual funds, UITs, WHFITs and WHMTs.
1
INTEREST INCOME (Details of Form 1099-INT)
2
Description
Sample Statement
ABC COMPANY
3
DEF COMPANY
4
7.If any income was subject to state tax withholding, the amount
withheld is reported in the State Tax Withheld (Box 13) column.
CUSIP/
Security Type
Date Paid
123456ABC
U.S. Corp
06/01/2013
09/01/2013
234567DEF
Foreign
06/01/2013
09/01/2013
Interest
Income
(Box 1)
Interest on U.S.
Savings Bonds
and Treasury
Obligations
(Box 3)
3,000.00
840.00
6,000.00
1,680.00
3,000.00
840.00
3,000.00
840.00
6,000.00
1,680.00
31358DAV6
Govt Agency
01/10/2013
06/30/2013
U.S. TREAS BD
8.250% 05/15/11 B/E
912810BUT
U.S. Govt
05/15/2013
08/29/2013
1,258.05
519.99 #
1,778.04
U.S. TREAS BILL
0.000% 03/08/12 B/E
PURCHASE PRICE: 245,582.50
Quantity: 250,000
912795PZ8
U.S. Govt
03/08/2013
4,417.50
U.S. TREAS BILL
0.000% 06/16/12
IRS Publication 1212 rate per $1000: 48.23
Quantity: 15,000
912795QD6
U.S. Govt
06/16/2013
1,446.90
7
Foreign
Tax Paid
(Box 6)
State
(Box 11)
State ID
Number
(Box 12)
State Tax
Withheld
(Box 13)
CA
CA
123456789
123456789
150.00
CA
CA
123456789
123456789
150.00
300.00
150.00
150.00
300.00
1,109.38
1,109.38
2,218.76
Interest Income—U.S. Corporations and on Your Credit Balance
6,040.00
Interest Income—Foreign Corporations
6,000.00
Total
6
Investment
Expenses
(Box 5)
840.00
3,000.00
FEDL NATL MTG ASSN DEB
8.875% 07/10/14 REG DTD 07/10/10
Interest Income—U.S. Government Agencies
5
Federal
Income Tax
Withheld
(Box 4)
2,218.76
14,218.76
7,642.44
3,360.00
0.00
600.00
SPECIAL MESSAGE FOR OWNERS OF MUTUAL FUNDS, UITs, WHFITs, WHMTs AND REITs
Your clients’ Tax Information Statement may display the following message, if we have not received final reallocation information by the
completion of the phased mailing:
Supplemental information regarding the percentages of taxexempt income on municipal funds by state and the percentage
of government agency, direct federal and foreign source for funds
will be available by March 1, 2014, via mytaxhandbook.com.
Income and interest declared on these investments in October,
November or December 2013 are considered received on December
31, 2013, even if the income and interest were not actually paid until
January (in the case of registered investment companies [RICs] [or
mutual funds] and REITs) or February (in the case of WHFITs and
WHMTs) 2014. Accordingly, these amounts are reported on your
2013 IRS Form 1099.
21
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Tax-Exempt Interest Income
1.Tax-exempt interest income is reported on IRS Form 1099-INT.
Amounts representing accrued interest sold are identified with
the symbol “*” on your clients’ statements. It may be necessary to
reduce the amount of the tax-exempt interest income category by
the amount of accrued interest purchased.
2.Box 10 reports the CUSIP number(s), if any, of the tax-exempt
bond(s) for which tax-exempt interest is reported in Box 8.
3.Accrued interest received on municipal notes and bonds sold
between interest payment dates is reported on a settlement-date
basis and is included in the Tax-Exempt Interest (Box 8) category.
Sample
1
4.If any income was subject to state tax withholding, the amount
withheld is reported in the State Tax Withheld (Box 13) column.
TAX-EXEMPT INTEREST (Details of Form 1099-INT)
2
3
Description
ABC COMPANY
U.S. CORP
Tax-Exempt
Bond CUSIP
No. (Box 10)
Date Paid
Tax-Exempt
Interest
(Box 8)
123456ABC
06/01/2013
3,000.00
Specified
Private Activity
Bond Interest
(Box 9)
Federal
Income Tax
Withheld
(Box 4)
4
Investment
Expenses
(Box 5)
Foreign
Tax Paid
(Box 6)
State
(Box 11)
State ID
Number
(Box 12)
State Tax
Withheld
(Box 13)
CA
123456789
210.00
840.00
Dividends and Distributions
1.Dividends and distributions are reported on IRS Form 1099-DIV.
Details are displayed on Tax Information Statements to provide
your clients with transaction-level information.
5.If any income was subject to federal tax withholding, the amount
withheld is reported in the Federal Income Tax Withheld (Box 4)
column.
2.Transactions are listed in CUSIP sequence.
3.Subtotals in the Total Ordinary Dividends (Box 1a) column are
provided for income from total U.S. and foreign corporations to
assist in preparing tax returns.
6.Your clients may deduct investment expenses, subject to the
2% limit, as “other expenses” on Form 1040, Schedule A. Their
share of UIT, WHFIT and WHMT expenses is also reported in the
Investment Expenses (Box 5) column.
4.Dividends that are eligible for a 15% (or 0%) maximum rate are
separated in the Qualified Dividends (Box 1b) column.
7.If any income was subject to foreign tax, the foreign tax paid is
reported in the Foreign Tax Paid (Box 6) column.
Sample statement
8.If any income was subject to state tax withholding, the amount
withheld is reported in the State Tax Withheld (Box 14) column.
1
DIVIDENDS AND DISTRIBUTIONS (Details of Form 1099-DIV)
3
Description
2
Date
Paid
4
Total
Ordinary
Dividends
(Box 1a)
Qualified
Dividends
(Box 1b)
5
*Total
Capital Gain
Distributions
(Box 2a)
Nondividend
Distributions
(Box 3)
Federal
Income Tax
Withheld
(Box 4)
6
Investment
Expenses
(Box 5)
7
Foreign Tax
Paid (Box 6)
8
State
(Box 12)
State ID
Number
(Box 13)
State Tax
Withheld
(Box 14)
ABC COMPANY
CUSIP: ABC123456
06/01/2013
3,000.00
3,000.00
840.00
CA
123456789
210.00
DEF COMPANY
CUSIP: DEF123456
06/01/2013
3,000.00
3,000.00
840.00
CA
123456789
210.00
6,000.00
6,000.00
1,680.00
Total
22
420.00
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Tax-Exempt Dividends
This section shows tax-exempt interest, including exempt-interest dividends from a mutual fund or other RIC. Clients report this amount on line
8b of IRS Form 1040 or Form 1040A.
Sample
TAX-EXEMPT DIVIDENDS (Details of Form 1099-DIV)
Description
ABC COMPANY
CUSIP: ABC123456
Date Paid
Exempt
Interest Dividends
(Box 10)
Specified Private
Activity Bond
Interest Dividends
(Box 11)
Federal Income
Tax Withheld
(Box 4)
State
(Box 12)
State ID Number
(Box 13)
State Tax Withheld
(Box 14)
06/01/2013
3,000.00
1,000.00
840.00
CA
123456789
210.00
SPECIAL MESSAGE FOR OWNERS OF MUTUAL FUNDS, UITs, WHFITs, WHMTs AND REITs
Your clients’ Tax Information Statement may display the following message, if we have not received final reallocation information by the
completion of the phased mailing:
Supplemental information regarding the percentages of taxexempt income on municipal funds by state and the percentage
of government agency, direct federal and foreign source for funds
will be available by March 1, 2014, via mytaxhandbook.com.
Income and interest declared on these investments in October,
November or December 2013 are considered received on December
31, 2013, even if the income and interest were not actually paid until
January (in the case of registered investment companies [RICs] [or
mutual funds] and REITs) or February (in the case of WHFITs and
WHMTs) 2014. Accordingly, these amounts are reported on your
2013 IRS Form 1099.
Capital Gain Distributions
1.The Capital Gain Distributions section identifies various
classifications of capital gain distributions from RICs
(mutual funds and ETFs treated as mutual funds) and REITs.
Sample statement
Please note: This section does not include short-term capital
gain distributions from RICs (mutual funds and ETFs treated
as mutual funds) and REITs.
1
2.The sum of the Unrecaptured Section 1250 Gain (Box 2b) column,
Section 1202 Gain (Box 2c) column, Collectibles (28%) Gain (Box
2d) column and Long-Term Capital Gain Distributions column
is displayed in the Total Capital Gain Distributions (Box 2a)
column, which has been carried forward from the Dividends and
Distributions section.
CAPITAL GAIN DISTRIBUTIONS
(For individuals, report Total Capital Gain Distributions on Form 1040, Schedule D, Line 13, column (h). To report Unrecaptured Section 1250 Gain, Section 1202 Gain and
Collectibles (28%) Gain, see instructions to Form 1040, Schedule D.)
2
Total Capital Gain
Distributions
(Box 2a)
Unrecaptured
Section 1250 Gain
(Box 2b)
Section 1202
Gain
(Box 2c)
Collectibles
(28%) Gain
(Box 2d)
Long-Term
Capital Gain
Distributions
Description
Date Paid
ABC REIT INC CL B
06/30/2013
500.00
175.00
225.00
0.00
ABC FUND A
01/11/2013
125.00
0.00
125.00
0.00
0.00
625.00
175.00
350.00
0.00
100.00
TOTAL
23
100.00
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Liquidation Distributions
1.Liquidating distributions, sometimes called liquidating dividends, are distributions your clients receive during a partial or complete
liquidation of a corporation. This section displays both cash and noncash liquidation distributions (Box 8 and 9).
2.Total Federal Tax Withheld and Total State Income Tax Withheld on Dividends and Distributions for the Form 1099-DIV will be displayed
after this section.
Sample statement
LIQUIDATION DISTRIBUTIONS (Details of Form 1099-DIV)
Noncash
Liquidation
Distributions (Fair
Market Value)
(Box 9)
1
2
Description
Date Paid
Cash Liquidation
Distributions
(Box 8)
ABC COMPANY
CUSIP: ABC123456
06/15/2013
100.00
Federal Income
Tax Withheld
(Box 4)
State
(Box 12)
State ID Number
(Box 13)
Total Federal Income Tax Withheld on Dividends and Distributions:
2,520.00
(Box 4)
Total State Income Tax Withheld on Dividends and Distributions
630.00
(Box 14)
State Tax Withheld
(Box 14)
OID
1.OlD is reported on IRS Form 1099-OlD. OlD on U.S. Treasury
Obligations (Box 8) is reported separately.
3.If any income is subject to federal tax withholding, the amount
withheld is reported in the Federal Income Tax Withheld
(Box 4) column.
2.Transactions are listed in CUSIP sequence.
4.If any income was subject to state tax withholding, the amount
withheld is reported in the State Tax Withheld (Box 12) column.
Sample statement
1
2013 Form 1099-OID
(For individuals, report details on Form 1040; Schedule B; Line 1.)
ORIGINAL ISSUE DISCOUNT
OMB No. 1545-0117
This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines
that it has not been reported.
Description
(Box 7)
2
CERTIFICATES ACCRUAL TREAS
SECURITY
CUSIP: 123ABC456
Lot No.
1
Lot
Quantity
10,000
Accrual
Begin/
Entry
Date
01/01/2013
Days
Held
Daily OID
Rate Per
$1,000
Original
Issue
Discount
for 2013
(Box 1)
135
.0385675
52.45
3
Other
Periodic
Interest
(Box 2)
Federal
Income Tax
Withheld
(Box 4)
OID on U.S.
Treasury
Obligations
(Box 8)
4
Investment
Expenses
(Box 9)
State
(Box 10)
14.68
CA
State ID
Number
(Box 11)
123456789
State Tax
Withheld
(Box 12)
3.84
Miscellaneous Income
1.The total amount displayed in the Miscellaneous Income section
is reported on IRS Form 1099-MISC. Details are displayed
on Tax Information Statements to provide your clients with
transaction-level information.
2.Transactions are listed in CUSIP sequence (although CUSIPs are
not displayed).
Sample
1
4.If any income was subject to state tax withholding, the amount
withheld is reported in the State Tax Withheld (Box 16) column.
MISCELLANEOUS INCOME (Details of Form 1099-MISC)
Description
2
3.If any income was subject to federal tax withholding, the amount
withheld is reported in the Federal Income Tax Withheld
(Box 4) column.
ABC ROYALTY TRUST
Date
Paid
Rents
(Box 1)
06/01/2013
3,000.00
Royalties
(Box 2)
Other
Income
(Box 3)
3
Substitute Payments
in Lieu of Dividends
and Interest
(Box 8)
25.00
24
4
Federal
Income Tax
Withheld
(Box 4)
State Tax
Withheld
(Box 16)
State/
Payer’s State
Number
(Box 17)
840.00
210.00
CA/123456789
State Income
(Box 18)
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Transactions We Do Not Report to the IRS
Information regarding transactions that we do not report to the IRS is provided to help your clients prepare their tax returns. The section
consists of the following categories: Non-Reportable Proceeds and Cost Basis Information, Municipal OID, Non-Reportable Transactions,
Advisory Fees, Equity Options Transactions, Securities Purchased and Margin Interest Expense.
>New for 2013: NON-REPORTABLE PROCEEDS AND COST
BASIS INFORMATION
3.Transactions Not Reported to the IRS and for Which Shortor Long-Term Determination Is Unknown (to Broker): For
Informational Purposes Only
Certain nonreportable options, fixed income, currency transactions*,
and certain Partnership redemptions reported on K-1s that
previously displayed within the Form 1099-B section will be grouped
and sorted by the CUSIP within the following three subsections.
Please note: This section will only be displayed for accounts
receiving the TYES. This data is provided to your clients
for informational purposes only. Please see instructions for
additional information.
1.Short-Term Transactions Not Reported to the IRS on Form 1099-B:
For Informational Purposes Only
2.Long-Term Transactions Not Reported to the IRS on Form 1099-B:
For Informational Purposes Only
TRANSACTIONS WE DO NOT REPORT TO THE IRS
NON-REPORTABLE PROCEEDS AND COST BASIS INFORMATION
Disposition
Transaction
Sample statement
1
Disposition
Method
Quantity
Gross Proceeds
Less Commissions
and Option
Premiums
Cost or
Other Basis
Adjustments
W=Wash Sale Loss
O=Option Premium
Realized Gain
or (Loss)
CUSIP: 123456ABC
Redemption
FIRST IN FIRST OUT
1,000
01/01/2013
06/01/2013
1,000.00
900.00
Redemption
FIRST IN FIRST OUT
2.000
01/02/2013
06/02/2013
2,000.00
1,800.00
200.00
3,000.00
2,700.00
300.00
3,000.00
2,700.00
300.00
Short-Term Transactions Not Reported Total
100.00
Long-Term Transactions Not Reported to the IRS on Form 1099-B: For Informational Purposes Only
Description: Call ABC
3
Date of Sale
or Exchange
Short-Term Transactions Not Reported to the IRS on Form 1099-B: For Informational Purposes Only
Description: U.S. Treasury Bill
2
Date of
Acquisition
CUSIP: 123456ABC
Call
FIRST IN FIRST OUT
100
01/01/2013
06/01/2013
100.00
50.00
50.00
Call
FIRST IN FIRST OUT
200
01/02/2013
06/02/2013
200.00
100.00
100.00
300.00
150.00
150.00
300.00
150.00
150.00
Long-Term Transactions Not Reported Total
Transactions Not Reported to the IRS and for Which Short- or Long-Term Determination is Unknown (to Broker): For Informational Purposes Only
Description of Property: ABC OPTION
CUSIP: 123456ABC
Equity Option
FIRST IN FIRST OUT
100
06/01/2013
Equity Option
FIRST IN FIRST OUT
200
06/01/2013
1,000.00
2,000.00
3,000.00
Other Transactions Not Reported Total
3,000.00
Total
6,300.00
* Exchanges of foreign currency for USD and exchanges of foreign currency for a different foreign currency are displayed in this section.
When the exchange is a forward contract, it also is reported on Form 1099-B, within the section titled Foreign Currency Forward Contracts.
Please see that section and the instructions that follow it for more information.
25
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Transactions We Do Not Report to the IRS (continued)
>MUNICIPAL ORIGINAL ISSUE DISCOUNT (OID)
4.Transactions are listed in CUSIP sequence.
5.Municipal OlD is classified in this section as either OID Subject
to Alternative Minimum Tax or OID Not Subject to Alternative
Minimum Tax.
TRANSACTIONS WE DO NOT REPORT TO THE IRS
5
Sample statement
MUNICIPAL ORIGINAL ISSUE DISCOUNT
4
CUSIP
Lot
No.
Rate
Source
Lot
Quantity
ANYWHERE CNTY PA
ARPT REV GTR PITTS
INTL ARPT SER D SUBJ
TO AMT TO YLD 8.3%
7.750% 01/01/20 REG
DTD 07/01/89 CLB
123456AB7
1
Calc.
20,000
ANYWHERE BRDG &
TUNL AUTH N.Y. REVS
CONVENTION CTR PROJ
SER D O.I.D.
7.000% 01/01/13 REG
DTD 06/15/86 PRF
123456AB7
1
Calc.
75,000
Description
Accrual
Period
Begins
Days
Held
Daily OID Rate
per $1,000
01/02/2013
07/02/2013
181
184
365
.0018441
.0019206
01/02/2013
07/02/2013
181
184
365
.0085961
.0089700
Original Issue Discount
Subject to Alternative
Minimum Tax
Original Issue Discount
Not Subject to Alternative
Minimum Tax
6.68
7.07
13.75
116.69
123.79
240.48
TOTAL
13.75
240.48
TRANSACTIONS WE DO NOT REPORT TO THE IRS
>NONREPORTABLE DISTRIBUTIONS
6.Transactions are listed in CUSIP sequence.
7.This section displays nonreportable distributions, such as
Partnership Cash Distributions, Shortfalls, Return of Principal
Distributions and Non Qualified Stated Interest. Please see page
40 for descriptions of these distribution types.
TRANSACTIONS WE DO NOT REPORT TO THE IRS
7
Sample
NON-REPORTABLE
TRANSACTIONS
MUNICIPAL ORIGINAL
ISSUE DISCOUNT
6
Description
Description
ANYWHERE
ANYWHERE CALIFORNIA
CNTY PA
MUNICIPAL
VALUE
FD
ARPT REV GTR
PITTS
INC
INTLCOM
ARPT SER D SUBJ
TO AMT
TO YLD 8.3%
ABC
FAMILY
7.750% 01/01/20
REG
RESTAURANT
LP EQUITY
DTD 07/01/89
PARTN
SECS CLB
CUSIP
CUSIP
123456789
123456AB7
ANYWHERE BRDG &
TOTAL
TUNL AUTH N.Y. REVS
ELECTRONIC
WITHDRAWALS
CONVENTION CTR
PROJ
SER D O.I.D.
Process
7.000% 01/01/13 REG
DTD 06/15/86 PRF
123456AB7
Lot
No.
1
123456789
Rate
Lot
Date PaidQuantity
Source
07/01/2013
Calc.
20,000
10/01/2013
of Principal
Accrual
Original Issue DiscountReturn Original
Issue Discount
DistributionsNot
andSubject
Non-Qualified
Period Partnership
Days Cash
Daily OID Rate
Subject to Alternative
to Alternative
Stated Interest
Begins Distributions
Held
per $1,000 ShortfallsMinimum Tax
Minimum Tax
200.00
01/02/2013
181
.0018441
6.68
100.00
07/02/2013
184
.0019206
7.07
300.00
365
13.75
02/15/2013
1
Calc.
75,000
01/02/2013
07/02/2013
TOTAL
210.00
210.00
420.00
181
420.00
184
365
.0085961
.0089700
300.00
13.75
TRANSACTIONS WE DO NOT REPORT TO THE IRS
26
116.69
123.79
240.48
240.48
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Transactions We Do Not Report to the IRS (continued)
>NEW FOR 2013: ADVISORY FEES DETAIL INFORMATION
8. Certain advisory fees charged to your clients’ accounts during 2013 will be displayed in this section. New for 2013, the transactional
details of each individual fee that was charged to clients for the year will display in the Advisory Fees Detail section.
Sample
8
ADVISORY FEES
Description
Date Paid
Amount
MANAGEMENT FEE
03/31/2013
(100.00)
MANAGEMENT FEE
06/30/2013
(100.00)
MANAGEMENT FEE
09/30/2013
(100.00)
MANAGEMENT FEE
12/30/2013
(100.00)
TOTAL
(400.00)
Advisory Fees. Certain advisory fees charged to your account during 2013 will be displayed in this section. Advisory fees are generally deductable to the extent they exceed 2% of your AGI on IRS Form 1040, Schedule A, line 23.
>EQUITY OPTIONS TRANSACTIONS
9.The Equity Options Transactions section includes purchases,
sales, expirations, exercises and assignments.
Please note: This section will only be displayed for accounts
receiving the YTIS.
10.Transactions are listed in CUSIP sequence.
Sample statement
9 EQUITY OPTIONS TRANSACTIONS
Expiration Date/
Strike Price
Trade/Process
Date
Transaction Type
Quantity
PUT 100 DELL
COMPUTER CORP
CUSIP: 2470259TO
EXP 08-19-13 @ 75
08/18/2013
Sell Open
3
88.99
PUT 100 DELL
COMPUTER CORP
CUSIP: 2470259TO
EXP 08-19-13 @ 75
08/21/2013
Expiration
3
0.00
CALL 100 LANCER GRP.
CUSIP: 51461D240
EXP 06-30-13 @ 16 5/8
03/16/2013
Buy Open
25
CALL 100 LANCER GRP.
CUSIP: 51461D240
EXP 06-30-13 @ 16 5/8
06/30/2013
Sell Close
25
Description
10
TOTAL
Purchase Amount
6,363.80
7,500.00
6,363.80
27
Proceeds
7,588.99
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Transactions We Do Not Report to the IRS (continued)
>SECURITIES PURCHASED
12.Transactions are listed in CUSIP sequence.
11.The Securities Purchased section provides your clients
with information needed to help establish the cost basis
of investments.
13.Accrued Interest Purchased related to the acquisition of debt
obligations is displayed in this section.
Please note: This section will only be displayed for accounts
receiving the YTIS. The TYES provides cost basis information
within the various Form 1099-B subsections for both covered
and noncovered securities.
11
13
Sample statement
12
>MARGIN INTEREST EXPENSE
Sample
14. The Margin Interest Expense Charged to Your Account section provides the amount of margin interest charged to an account during
the year. Margin interest may be deductible for tax purposes.
14
SUMMARY OF TRANSACTIONS WE DO NOT REPORT TO THE IRS (See enclosure for additional information)
Margin Interest Expense Charged to Your Account ..................................................................................................................................................................................................... 662.60
28
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Sample
Electronic Deposits
ELECTRONIC DEPOSITS
Process/
Settlement Date
Activity Type
Description
Amount
01/31/2013
ELECTRONIC TRANSACTION
DIRECT DEPOSIT 1231231234 THE BOARD OF PEN
05/31/2013
ELECTRONIC TRANSACTION
DIRECT DEPOSIT 9999995559 TCHRS R ET SYS
1,890.34
808.91
Total Electronic Deposits
2,699.25
Sample
Other Deposits
Process/
Settlement Date
Activity Type
02/01/2013
Description
CHECK RECEIVED
CHECK RECEIVED 4335
02/25/2013
CHECK RECEIVED
CHECK RECEIVED 9538
09/09/2013
FEDERAL FUNDS RECEIVED
XYZ BANK NA NYBD CIT 14458
Quantity
Price
Amount
18,551.35
16,446.31
20,000.00
Total Other Deposits
54,997.66
Checking Activity
CHECKING ACTIVITY
Process
Date
Date
Written
Check
Number
Payee
Check Category
Amount
Sample
Code 0
11/26/2013
11/26/2013
0651
POSTY CARDS
CODE O
(69.69)
11/26/2013
10/26/2013
0652
DR. GREENE
CODE O
(340.00)
12/30/2013
11/30/2013
0666
SILVER CREEK FARMS
CODE O
(390.00)
Code 0 Total
(799.69)
Charitable Contributions
01/07/2013
12/15/2013
0642
ANYWHERE UNIV
CHARITABLE CONTRIBUTIONS
01/03/2013
12/15/2013
0654
ST JOSEPHS PREP
CHARITABLE CONTRIBUTIONS
(1,000.00)
(500.00)
03/09/2013
02/28/2013
0661
XYZ FOOD BANK
CHARITABLE CONTRIBUTIONS
(1,000.00)
Charitable Contributions Total
(2,500.00)
Total Checking Activity
(3,299.69)
Debit Card Activity
DEBIT CARD ACTIVITY
Process
Date
Transaction
Date
Vendor
10/25/2013
10/25/2013
11/22/2013
11/22/2013
12/25/2013
12/24/2013
Location
Reference Number
Amount
ATM WITHDRAWAL
HOLLYWOOD
11111111111111111111111
(2,000.00)
ATM WITHDRAWAL
MAIN & VINE STS
22222222222222222222222
ATM WITHDRAWAL
CHRISTMAS CITY
333333333333333333333333
Sample
Cash Disbursements
(2,000.00)
(5,000.00)
Total Cash Disbursements
(9,000.00)
Retail Stores
06/23/2013
06/22/2013
MARKS & SPENCER
SPRINGFIELD VA
44444444444444444444444
06/24/2013
06/23/2013
MARKS & SPENCER
SPRINGFIELD VA
55555555555555555555555
(208.25)
45.27
Retail Stores Total
(162.98)
Total Debit Card Activity
(9,162.98)
Sample
Electronic Withdrawals
Recipient’s Name and Address:
Settlement Date
Activity Type
01/07/2013
JOHN Q. PUBLIC
12/14/2013
Account Number: 123-456789
Description
ELECTRONIC TRANSACTION
recipient’s
IdentificationMORTGAGE
AUTHORIZED
DEBIT 474747474WFHM
ELECTRONIC TRANSACTION
AUTHORIZED DEBIT ABC EXPRESS
2012 Tax and
Amount
Year-end STaTemenT
As of 02/20/2013
Number: ***-**-9999
Total Electronic Withdrawals
(2,425.30)
(2,472.95)
(4,898.25)
OTHER DEPOSITS
TranSaCTIOnS We dO nOT rePOrT TO THe IrS
(continued)
ELECTRONIC WITHDRAWALS
Process
Settlement Date
Sample
Other Withdrawals
Activity Type
Description
01/07/2012
ELECTRONIC TRANSACTION
AUTHORIZED DEBIT 474747474WFHM MORTGAGE
Amount
12/14/2012
ELECTRONIC TRANSACTION
AUTHORIZED DEBIT ABC EXPRESS
(2,425.30)
(2,472.95)
Total Electronic Withdrawals
(4,898.25)
OTHER WITHDRAWALS
Process
Settlement Date
Activity Type
Description
05/02/2012
FEDERAL FUNDS SENT
ABC NATIONAL
08/10/2012
FEDERAL FUNDS SENT
ABC SAFE DEPOSIT
Total Other Withdrawals
Quantity
Price
Amount
(23,750.00)
(5,000.00)
(28,750.00)
Equity Option Transactions. If you traded or held an equity option(s) in your account during 2012, we may display certain activities (for instance, sales, purchases and expirations) related to those options in this section
of your Tax Information Statement. These transactions are only displayed in this section if you do not receive the premium Tax and Year-End Statement. If you receive the Tax and Year-End Statement these transactions will
be included in the Schedule of Realized Gains and Losses section of that statement. The closing of an equity option transaction is typically reportable as a capital gain or loss on IRS Form 1040, Schedule D.
Securities Purchased. Securities purchased through your account during 2012 may be displayed in this section. You need this information to calculate a gain or loss upon disposition of the securities. The net cost
displayed includes commissions and fees. If the security purchased is a debt instrument, the net cost does not include accrued interest purchased. Accrued interest purchased is reported separately in this section of your Tax
Information Statement. These transactions are only displayed in this section if you do not receive the premium Tax and Year-End Statement. If you receive the Tax and Year-End Statement these transactions will be included
in the Schedule of Realized Gains and Losses section of that statement. The cost of securities purchased during 2012 should be reported on your tax return in the year in which the securities are sold or redeemed on IRS
Form 1040, Schedule D.
29
Margin Interest Expense Charged to Your Account. Margin interest expense charged to your account during 2012 is summarized and reported in this section of your Tax Information Statement. Margin interest
expense, if characterized as a deductible investment interest expense and if paid during 2012, should be reported on IRS Form 1040, Schedule A, line 14. This amount may be subject to the limitations imposed on
deducting investment interest expense. See IRS Form 4952 (Investment Interest Expense Deduction) for additional information.
Liquidation Distributions. Generally, liquidation distributions are treated as amounts received from the sale or exchange of a capital asset and should be reported on IRS Form 8949 and Form 1040, Schedule D (Capital
Gains and Losses).
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
CDOs, CMOs and REMICs
According to federal tax law, income from the above-mentioned securities is calculated on an accrual basis, not on a cash basis. We are
required to furnish additional information to holders of these securities.
Please note: We are required by the IRS to report this information to your clients by March 17, 2014.
–For collaterized debt obligations (CDOs) issued with OID, income is reported in the Form 1099-OID section of the Tax Information
Statement. For CDOs issued without OID, income is reported in the Form 1099-INT section of the Tax Information Statement.
Additional Written Statement—CDOs
(Including REMICs)
3.The amount displayed in the Aggregate Amount of Accrued
Interest Income column is calculated as ([quantity] x [days held]
x [daily accrued interest income]) ÷ 1,000. For instance, using
the numbers below, ([50,000] x [30] x [.2500000]) ÷ 1,000 =
375.00.
1.We are required to report certain additional information to your
clients regarding CDOs, including REMICs. We provide this on an
Additional Written Statement. Your clients need this additional
information to complete their tax returns. The Additional Written
Statement also provides calculations of interest income and OID.
The Additional Written Statement, however, is provided only to
your clients, but not to the IRS.
Depending on the type of CDO held in your client’s account,
accrued interest income is reported on either IRS Form 1099-INT
or 1099-OID. OID is reported on IRS Form 1099-OID.
2.The amount displayed in the Aggregate Amount of OID column
is calculated as ([quantity] x [days held] x [daily OID]) ÷ 1,000.
For instance, using the numbers below, ([50,000] x [30] x
[.0056711]) ÷ 1,000 = 8.51.
1
ADDITIONAL WRITTEN STATEMENT—COLLATERALIZED DEBT OBLIGATIONS (Including REMICs)
Sample Statement
Per $1,000 of Original Principal
Quantity
Accrual
Period
Begins
1
50,000
50,000
08/26/2013
09/26/2013
30
30
60
990.0156
990.1857
1
30,000
30,000
30,000
01/25/2013
02/25/2013
03/25/2013
30
30
30
90
998.4197
998.4621
998.4883
CUSIP
Lot
No.
ABC GTD REMIC PASS
THRU CTF REMIC
31358FAN9
Lot Total:
Security Total:
ABC CMO TR
TR 89 CMO SER 11
CL 11-D
69290JBC5
Lot Total:
Security Total:
Days
Held
Beginning
Adjusted
Issue Price
Daily
Original
Issue
Discount
Daily
Accrued
Interest
Income
.0056711
.0078586
.2500000
.2500000
.2500000
.2500000
30
Aggregate Amount of
2
3
Original
Issue
Discount
Accrued
Interest
Income
8.51
11.79
20.30
20.30
Actual
Interest
Investment
Paid (Cash) Expenses
375.00
375.00
750.00
750.00
375.00
375.00
750.00
750.00
225.00
225.00
225.00
675.00
675.00
225.00
225.00
225.00
675.00
675.00
15.00
15.00
30.00
30.00
Ending
Market
Discount
Fraction
.0168721
.0237814
.0226692
.0233715
.0237944
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Additional Written Statement—WHFITs and WHMTs
We are required to provide details for items of gross income and expenses – Items of gross income attributable to the WHFIT for the calendar
year (including redemption and trust sale proceeds, non-pro rata
reflected on 1099 forms for WHFITs, including UITs, MBSs and commodity
partial principal payments, redemption asset proceeds and sales
trusts, which are all considered WHFITs. A WHFIT is also considered a
asset proceeds and all other amounts of income attributable
WHMT if substantially all of its assets include trust interests in one or
to selling or redeeming your client’s interest in the WHFIT) are
more WHMTs and regular interest in one or more REMICs. We provide
displayed on the Additional Written Statement.
this information on an Additional Written Statement.
– Expenses not included in Box 5 of IRS Form 1099 are displayed
in the Investment Expenses column of the Additional Written
Statement.
Sample
Please note: This Additional Written Statement provides details of
amounts reported on IRS Form 1099. Your clients need this additional
information to complete their tax returns. The Additional Written
Statement provides details of certain income and expenses for
WHFITs and WHMTs. The Additional Written Statement, however,
is provided to your clients only and is not provided to the IRS.
Period Principal Paid
or Proceeds
Cost/Purchase
of Sale
Price
A
B
Gross
Interest
C
Refer to the explanation of items displayed on the sample
statement below.
Investment
Expenses
Market
Discount
Fraction
Remaining
Income
Adjustment
Income
Adjustment
Adjusted
Basis
Percentage
Original
Cost
Basis
D
E
f
g
h
i
A.Period Principal Paid or Proceeds of Sale
F. remaining income adjustment
This amount represents the principal distributed to record date
holders or the proceeds of a sale net of accrued interest. This amount
includes redemption and sale proceeds and redemption and sale
asset proceeds. It also includes principal payments that completely
retire a debt instrument (other than a final scheduled principal
payment) and pro rata partial principal prepayments. The amount
should be reported on IRS Form 8949 and Form 1040, Schedule D.
This represents the portion of your client’s premium or discount
that remains unamortized as of the start of the period. A positive
amount represents additional income in the form of a market
discount. A negative amount indicates a bond premium offset to
interest income.
G.Income Adjustment
Your client must increase or decrease his or her taxable income
by the amount of this premium or discount on purchases for his
or her account.
B.Cost/Purchase Price
This amount represents the cost of a purchase (the amount paid for
the units, including broker’s commissions or the fair market value of
such units on the date they were distributed), net of accrued interest.
h.Adjusted Basis Percentage
This represents the ratio of the principal distribution over the
principal balance at the start of the year. Clients use this ratio
to determine the portion of their adjusted basis that represents
return of principal. It should be used to compute gain or loss on
IRS Form 8949 and Schedule D of IRS Form 1040.
C.Gross Interest
This amount represents the amount of interest distributed to your
client and received as accrued interest on sales or paid as accrued
interest on purchases.
D.Investment Expenses
Please use the cost basis factor provided to allocate a portion of
your client’s cost basis in the WHFIT (what was paid for the
WHFIT, less any reinvested dividend and/or capital gains
distributions) to each sale or disposition to determine any
attributable and reportable sales proceeds and realized gains
or losses on Schedule D of IRS Form 1040. For commodity
trusts, the cost basis factor is reflected in the Adjusted Basis
Percentage column.
This amount represents your client’s share of investment
expenses paid by the trust. Your client may be able to deduct
these expenses on IRS Form 1040, Schedule A, line 14, but the
deduction is limited to net investment income.
E.Market Discount Fraction
This is the ratio used to compute your client’s market discount income
or premium amortization for the year. Amortization of bond premiums
I.Original Cost Basis
is deductible on IRS Form 1040, Schedule A, line 28. If your client is
claiming a deduction for amortization of premiums for bonds acquired This represents the amount that your client originally paid for the
units, including broker’s commissions or the fair market value
after October 22, 1986, but before January 1, 1988, the deduction
of such units on the date they were distributed. This amount
is treated as interest expense and is subject to the investment
should be used to compute gain or loss on IRS Form 8949 and
interest limitations. Use IRS Form 4952, Investment Interest Expense
Form 1040, Schedule D.
Deduction, to compute the allowable deduction. For taxable bonds
acquired after 1987, your client can elect to amortize the bond premium
over the life of the bond. See IRS Publication 550 for more information.
31
Cost B
Alloca
Facto
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Supplemental Information—Royalty Trusts and HOLDRS Trusts
We are required to report certain additional information to your clients regarding royalty and HOLDRS trusts. We provide this information on
a Supplemental Information Statement. Your clients need this additional information to complete their 2013 tax returns.
Please note:
– Royalty trusts and HOLDRS trusts are considered NMWHFITs for federal income tax purposes. These grantor trusts are subject to the
reporting requirements for WHFITs. The trustee of your client’s royalty trust will provide tax information in accordance with the applicable
U.S. Treasury regulations governing the information-reporting requirements of the trust as a WHFIT and a NMWHFIT. Links to tax
information booklets for royalty trusts will be available on mytaxhandbook.com when available on the trust’s website.
– For NMWHFITs generating interest and dividends only, we have reported required amounts using the “simplified reporting” procedure
authorized by the IRS.
Sample
– Please refer to the explanations below for each item displayed on the Supplemental Information Statement.
Severance
Tax
Fees
Administrative
Expense
A
B
C
Expenses
Subject to 2%
AGI Limitation
D
Expenses Not
Subject to 2%
AGI Limitation
Investment
Interest
Expense
Section
1231
Gain
Additions
to Basis
E
F
G
H
A.Severance Tax
F.Investment Interest Expense
This amount represents your client’s pro rata share of severance
taxes paid by the trust, which are deductible on IRS Form 1040,
Schedule E, line 16.
This amount represents your client’s share of investment interest
expense paid by the trust. If your client files IRS Form 1040, he
or she may be able to deduct these expenses on IRS Form 1040,
Schedule A, line 14, but the deduction is limited to net investment
income. This limitation is calculated on IRS Form 4952, Investment
Interest Expense Deduction. If your client’s investment interest
expense is deductible, this is reported as an itemized deduction on
IRS Form 1040, Schedule A, line 14.
B.Fees
Your client’s pro rata share of professional fees paid by the trust
are deductible on IRS Form 1040, Schedule E, line 10.
C.Administrative Expense
Your client’s pro rata share of trust administration expenses
paid and accrued during the period on a per unit basis should be
reported on his or her IRS Form 1040, Schedule E, line 19.
D.Expenses Subject to 2% adjusted gross income
(AGI) Limitation
This amount represents your client’s share of certain other
expenses incurred by the trust, subject to the 2% AGI limitation,
which can be deducted on IRS Form 1040, Schedule A, line 23.
E.Expenses Not Subject to 2% AGI Limitation
This amount represents your client’s share of certain other
expenses that are not limited to 2% of your AGI and should be
deducted on IRS Form 1040, Schedule A.
G.Section 1231 Gain
Section 1231 transactions are sales and exchanges of property held
for longer than one year and either used in a trade or business or
held for the production of rents or royalties. This amount should
first be reported on Form 4797, Sale of Business Property, and
then on Form 1040, Schedule D, line 11.
H.Additions to Basis
Your client’s original cost basis (the amount paid for the units,
including broker’s commissions or the fair market value of the
units on the date they were distributed) should be increased by
amounts reflected in this section to compute your client’s adjusted
basis. Your client’s adjusted basis should be used to compute
any gain or loss reportable on IRS Form 4797, Sales of Business
Property and then Schedule D as an attachment to IRS Form 1040.
32
Nonretirement Product Tax Information
SAMPLE OF PERSHING’S COMPOSITE 1099 TAX STATEMENT
Revised Tax Summary Statement
6.The Other Changes section displays security description, CUSIP,
date, prior information, revised information, reporting column and
statement section.
– Cost Basis Information Revisions: Prior and revised information
for changes to cost basis-related information will be displayed
in this section. If the following cost basis-related information is
revised, it will be displayed as type of gain or loss (short term
or long term), covered/noncovered, disposition transaction,
disposition method and acquisition date.
– If cost basis information is adjusted for covered securities
transactions, it may result in a revised tax information statement,
since typically the 1099-B form will be updated. If cost basis
information is adjusted for noncovered securities transactions,
a revised tax statement will typically only be produced if your
firm subscribes to our premium TYES.
The Revised Tax Summary Statement, which is included with the
Revised Tax Information Statement, explains revisions. The pages of
these two documents are numbered separately.
The Revised Tax Summary Statement includes the following information:
1.Dates listed in the Date column are based on original transaction
dates (not revised activity dates).
2.The Prior Information column displays activity amounts reported
on the initial Tax Information Statement. Amounts in this column
are not displayed on the revised Tax Information Statement.
3.Amounts displayed in the Revised Information column are based
on information we received after the initial statement was mailed.
4.The Reporting Column displays the column name of the particular
statement section affected by the revision.
Please note: If cost basis information is adjusted for noncovered
5.The Statement Section column displays the statement section name
affected by the revision. Use the information in the Statement Section
column and the Reporting Column to locate a particular transaction.
securities transactions, a revised tax statement will typically not
be produced. If your client would like to receive a new statement
inclusive of cost basis adjustments for noncovered transactions
you should request a duplicate statement. The request should be
made after the update is made to the account. See page 54 for
how to request a duplicate statement.
New for 2013: The following message will be provided when a contra
firm provides additional cost basis information after the phased mailing:
A revised tax statement has been generated due to changes in
cost basis information provided by your previous firm.
2013
YOUR REVISED TAX SUMMARY STATEMENT
Account Number: 123-456789
Revised Statement as of 02/15/2014
Recipient’s Name and Address:
JOHN Q. PUBLIC
1234 TOWNLINE STREET
APT. #1234
SOMEWHERE, CA 00000-0000
Your Financial Advisor Is:
PAYER INFORMATION:
ROBERT “CONTACT” ADVISOR
1234 STREET
BOX 1234
SOMEWHERE, CA 00000-0000
IP: 123
PERSHING LLC
Federal Identification
Number: 13-2741729
The following item(s) have been updated and are reflected on the revised 2013 tax information statement included in this package.
INCOME RECLASSIFICATIONS
Sample Statement
Description
ABC GROWTH COMPANY
1
2
3
4
5
CUSIP
Date
Prior
Information
Revised
Information
Reporting
Column
Statement
Section
123456ABC
04/11/2013
04/11/2013
04/11/2013
200.00
0.00
0.00
Qualified Dividends
Total Capidal Gain Distr.
Nondividend Distributions
1099-DIV
1099-DIV
1099-DIV
Reporting
Column
Statement
Section
0.00
100.00
100.00
CAPITAL GAIN RECLASSIFICATIONS
Description
ABC GROWTH COMPANY
CUSIP
Date
Prior
Information
Revised
Information
123456ABC
04/11/2013
04/11/2013
04/11/2013
100.00
0.00
0.00
CUSIP
Date
Prior
Information
123456DEF
01/11/2013
CUSIP
Date
Prior
Information
123456GIF
06/18/2013
25,963.13
CUSIP
Date
Prior
Information
Revised
Information
Reporting
Column
Statement
Section
123456RTU
04/25/2013
09/27/2013
04/09/2012
1,000.00
04/09/2013
2,000.00
Acquisition Date Change
Cost Basis Change
1099-B LT COVERED
1099-B LT COVERED
0.00
90.00
10.00
Long-Term Capital Gain Distr.
Total Capidal Gain Distr.
Nondividend Distributions
Capital Gain Distribution
Capital Gain Distribution
Capital Gain Distribution
ADDITIONS
Description
DEF FUND Q
0.00
Revised
Information
50.00
Reporting
Column
Ordinary Dividends (U.S. Corp)
Statement
Section
1099-DIV
DELETIONS
Description
DEF COMPANY
6
Revised
Information
0.00
Reporting
Column
Proceeds
Statement
Section
1099-B ST COVERED
OTHER CHANGES
Description
XYZ CORP.
33
Nonretirement Product Tax Information
IRS FORM 1099-B—PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
IRS Form 1099-B
>COVERED SECURITIES TRANSACTIONS
>SECURITIES TRANSACTIONS REPORTED
For covered securities transactions (identified in Box 6b), the
1099-B will report the Date of Sale or Exchange (Box 1a), Date of
Acquisition (Box 1b), Quantity (Box 1e), Gross Proceeds (Box 2a),
Cost or Other Basis (Box 3), Federal Income Tax Withheld (Box
4), Wash Sale Loss Disallowed (Box 5), whether the gain or loss
is short term or long term (Box 1c) and State Tax Withholding
Information (Boxes 13, 14 and 15).
Gross proceed amounts do not reflect net profit and are net
of transaction costs (for instance, commissions and option
premiums), as well as certain option premium adjustments. The
following types of securities transactions are reported to the IRS:
–Sales
–Redemptions
–Tender offers
>NONCOVERED SECURITIES TRANSACTIONS
For noncovered securities transactions (Box 6a), the 1099-B will
report the Date of Sale or Exchange (Box 1a), Quantity (Box 1e),
Gross Proceeds (Box 2a), Federal Income Tax Withheld (Box 4)
and State Tax Withholding Information (Boxes 13, 14 and 15).
The date of acquisition, cost or other basis, type of gain or loss
and whether any loss is disallowed due to a wash sale are
intentionally left blank and will not be reported to the IRS. Also,
noncovered securities transactions are grouped by the Date of
Sale or Exchange, regardless of the holding period. Taxpayers
are responsible for reporting cost basis and resulting gain or loss
realized upon disposition of a noncovered asset.
–Mergers for cash
Please note: If your firm subscribes to our premium TYES, the
date of acquisition, cost or other basis, type of gain or loss and
whether any loss is disallowed due to a wash sale for both
covered and noncovered securities transactions will be displayed
when available. Such detail for noncovered transactions are not
reported to the IRS and are disclosed within the detail section and
instructions of the 1099-B.
–Trust sales
–Maturities
–Some cash-in-lieu payments
–Short sales
–Commercial paper sales
–Final principal payments on bonds
–Consent fee payments
–Liquidation distributions
–Option premium for reverse convertibles
–Returns of principal
>ADDITIONAL IMPORTANT POINTS
Sales are reported according to the trade date. Transactions
with a December trade date and a January settlement date are
reported the year in which the trade date occurred. Your clients
should generally report these transactions on their tax returns
for the year during which the trade date occurred.
Sales of U.S. Treasury bills and other short-term discount
obligations are reported on IRS Form 1099-B. Interest from the
maturity of these securities is reported on IRS Form 1099-INT.
If any proceeds were subject to federal tax withholding, the
amount withheld is reported in the Federal Income Tax Withheld
(Box 4) column. We report this information to the IRS on Form
1099-B. If any proceeds were subject to state tax withholding, the
amount withheld is reported in the State Tax Withheld column.
We report this information to the IRS on Form 1099-B.
34
Nonretirement Product Tax Information
IRS FORM 1099-B—PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
>SHORT SALES
–Cost basis reporting rules require brokers to report short sales
>ADJUSTMENT COLUMN
for the tax year the short sale is “closed” (or the tax year it
The following adjustment amounts are displayed within the
is covered by delivery of securities to satisfy the short sale
Form 1099-B with the accompanying identifier:
obligation). In tax years prior to 2011, short sales were reportable
W = Disallowed wash sale losses (Box 5)
for the tax year the short sell was “opened” (or the tax year it
O = Option premiums
occurred). Therefore, if your client sold securities short in 2013,
>TRANSACTION TYPE
and did not close the short sale in 2013, the short sale will not
If your client held an interest in a UIT, MBS, royalty trust, HOLDRS
be reported in the Form 1099-B section of your client’s 2013 Tax
trust or commodities trust, we are required to report certain details
Information Statement. If your client sold securities short in 2012
regarding transactions for these securities on IRS Form 1099-B
and closed the short sale in 2013, the closed short sale should
because these investments are considered WHFITs. IRS rules
be reported in the Form 1099-B section of your client’s 2013
governing reporting for WHFITs require us to provide more detailed
Tax Information Statement. If your client executed a short sale
and comprehensive information that was not previously provided
with one broker and then transferred the short sale to a second
on Form 1099 in years prior to 2009, but does not impact the
broker, the second broker will be required to report the short sale
total amount of income or expenses that we report to your client.
when it is closed. Pershing will not report the closing of a short
Information reported to your client for WHFITs on IRS Form 1099-B
sale when a delivering broker has not transferred the proceeds of
is generally reported by your client on IRS Form 8949 and IRS Form
a short sale or if it has not transferred the cost of the securities
1040, Schedule D. These transactions are not found on your
used to close the short sale.
clients’ month-end statement, but are provided by the issuer for
–The holding period of a short sale for purposes of determining
reporting purposes.
whether the gain or loss on the closed short sale is short- or
>IRS Form 8949 and IRS Form 1040, Schedule D
long-term gain or loss is based on the holding period of the
Transactions should be reported separately on IRS Form 8949
security(ies) acquired to close the short sale. For that reason,
and Form 1040, Schedule D, as either short term or long term,
most short sales will result in short-term gain or loss as opposed
depending on the holding period. See the Instructions for Form
to long-term gain or loss. A short sale will be denoted with
8949 for exceptions to reporting each transaction on a separate
the words “short sale” in the Disposition Transaction column
row. The cost basis information will be provided for covered
of the 1099-B section of the YTIS. Clients should consult a tax
securities transactions. These transactions should be itemized in
professional or IRS Publication 550 for information on reporting
Part I of Form 8949 for short-term transactions and in Part II of
proceeds from closed short sales on their tax return.
Form 8949 for long-term transactions. Taxpayers should determine
the cost or other basis for each transaction reflected on Form 8949
and Schedule D from their records for noncovered transactions.
Short Sale Example
Your client sold 500 shares of ABC Company in 2013, of which
he or she acquired 200 shares in 2013 (closing transaction).
Pershing will report the disposition of the 200 shares on the IRS
Form 1099-B under Short-Term Transactions for Which Basis
Was Reported to the IRS.
35
Nonretirement Product Tax Information
IRS FORM 1099-B—PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
>REGULATED FUTURES CONTRACTS (BROAD-BASED
INDEX OPTIONS)
>IRS Form 1099-B—Foreign Currency
Forward Contracts
–Regulated futures contracts are reported to the IRS on
IRS Form 1099-B.
Brokers are not required to file with the IRS returns of information
(on Forms 1099-B) with respect to a sale of foreign currency
pursuant to a market order. A market order is an order to buy or
sell an investment immediately at the best available current price
and does not include a “forward contract” or a regulated futures
contract. In the foreign currency market, delivery is typically made
on a market order within two business days and is a nonreportable
“spot contract” for tax purposes to distinguish it from a “forward
contract.” A purchase or sale of foreign currency which requires
delivery or settlement on a date that is more than two business
days from the date of the contract, or is set at a price that is
other than the current market price, should not be a market order
transaction and is reportable as a “forward contract.” Accordingly,
this section reports only foreign currency forward contract activity
for 2013. Please refer to the sample on page 20.
–The Profit or (Loss) Realized in 2013 subsection displays
contracts settled or closed in 2013 on IRS Form 1099-B (Box 9).
–Transactions are listed in CUSIP sequence. CUSIPs are displayed
below security descriptions.
–The expiration date and strike price are displayed in the
Expiration Date/Strike Price column.
–The Unrealized Profit or (Loss) on Open Contracts—12/31/2012
subsection provides the details of all contracts open at the end
of 2012. Open contracts are marked to market as of December
31, 2012, to determine unrealized profit or (loss). We report this
information to the IRS on IRS Form 1099-B (Box 10).
–The Unrealized Profit or (Loss) on Open Contracts—12/31/2013
subsection provides the details of contracts open at the end of
2013. Open contracts are marked to market as of December 31,
2013, to determine unrealized profit or (loss). We report this
information to the IRS on IRS Form 1099-B (Box 11).
–The Aggregate Profit or (Loss) (Box 12) equals the Realized
Profit or Loss adjusted for the Unrealized Profit or Loss at
December 31, 2012, and December 31, 2013. Aggregate Profit or
Loss is calculated as follows: {Profit or (Loss) Realized in 2013
(Box 9)} – {Unrealized Profit or (Loss) on Open Contracts –
12/31/2012} + {Unrealized Profit or (Loss) on Open Contracts
– 12/31/2013}
36
Nonretirement Product Tax Information
irs form 1099-div—dividends and distributions
The following types of dividends and distributions are reported to the IRS:
>ORDINARY DIVIDENDS
>SPECIFIED PRIVATE ACTIVITY BOND INTEREST DIVIDENDS
– From mutual funds (including ETFs treated as RICs), REITs and
UITs and from both U.S. and foreign corporations
This section lists exempt-interest dividends paid by an RIC on
specified private activity bonds to the extent that the dividends are
attributable to interest on the bonds received by the RIC minus an
allocable share of the expenses.
– Paid on money market and bond funds
Please note: Tax Information Statements include income earned
on money market funds for which Pershing LLC is the payer of
income. When income from money market funds is not reported
on the Tax Information Statements, the fund company issues a
separate IRS Form 1099.
>STATE TAX WITHHELD
This section lists state income tax withholding; the rates vary by state.
>IMPORTANT POINTS
–Dividend income from equities is generally reported when paid.
– From short-term capital gains paid by mutual funds (including
tax-exempt mutual funds)
–Your clients may receive a revised Tax Information Statement from
us if they owned one or more mutual funds (including ETFs treated
as RICs), REITs, UITs or WHFITs. Each year, these companies
frequently reclassify their distributions for tax purposes based on
their year-end calculations. Reclassifications may be announced
after initial Tax Information Statements are mailed. If we do not
receive income reclassifications, the distributions will be classified
as nonqualified dividends. Pershing will include two asterisks (**)
beside income listed in the Form 1099-DIV section to indicate
that we have not received information from the corresponding
investment company, and there is a possibility that the Tax
Information Statement will be revised.
– The fair market value of the securities paid as taxable
stock dividends
>QUALIFIED DIVIDENDS
This section lists the portion of ordinary dividends from Box 1a
that are eligible for the 20%, 15% or 0% capital gains rate.
Certain conditions apply for these reduced tax rates. Your client
should contact a tax professional for assistance.
>TOTAL CAPITAL GAIN DISTRIBUTIONS
This section lists long-term capital gain distributions paid by
mutual funds and REITs. The classification of certain dividend
income may be reported as Unrecaptured Section 1250 Gain,
Section 1202 Gain or Collectibles (28%) Gain. The appropriate
columns will reflect this income.
>NONDIVIDEND DISTRIBUTIONS
This section lists return of capital paid by corporations, mutual
funds (including ETFs treated as RICs), UITs, WHFITs and REITs.
–Spillover distributions paid by mutual funds are reported in the
year in which distributions are declared and are typically paid in
January of the following year.
SPECIAL MESSAGE FOR OWNERS OF MUTUAL FUNDS,
UITs, WHFITs, WHMTs AND REITs
Your clients’ Tax Information Statement may display the following
message, if we have not received final reallocation information by
the completion of the phased mailing:
>FEDERAL INCOME TAX WITHHELD
This section lists federal income tax withheld, which is 28% of
dividends and distributions.
Income and interest declared on these investments in October,
November or December 2013 are considered received on December
31, 2013, even if the income and interest were not actually paid until
January (in the case of RICs [or mutual funds] and REITs) or February
(in the case of WHFITs and WHMTs) 2014. Accordingly, these
amounts are reported on your 2013 IRS Form 1099.
>INVESTMENT EXPENSES
Your clients may deduct investment expenses, subject to the
2% limit, as “other expenses” on Form 1040, Schedule A. Their
share of UIT, WHFIT and WHMT expenses is also reported in the
Investment Expenses column.
>FOREIGN TAX PAID
Supplemental information regarding the percentages of taxexempt income on municipal funds by state and the percentage of
government agency, direct federal and foreign source for funds will
be available by March 1, 2014, via mytaxhandbook.com.
This section lists foreign tax paid, which includes foreign tax
withheld from foreign source dividends.
>LIQUIDATION DISTRIBUTIONS
This section lists distribution of cash or securities paid in
connection with a corporation’s or a liquidating trust’s complete
or partial liquidation.
>EXEMPT-INTEREST DIVIDENDS
This section lists exempt-interest dividends from a mutual fund or
other RIC.
37
Nonretirement Product Tax Information
irs form 1099-int—interest income
The following types of interest income and tax items are reported to the IRS:
>INTEREST INCOME
>IMPORTANT POINTS
–Interest income from U.S. corporate bonds, taxable municipal
bonds and certain REMIC or CDO interest
–Interest on U.S. savings bonds and Treasury obligations is
exempt from state and local taxes. However, each state’s
tax laws vary; your clients should consult their state taxing
authorities or tax professionals.
–Interest income from U.S. government agencies (for instance,
Government National Mortgage Association and Federal
National Mortgage Association)
–Interest income from U.S. Treasury bills purchased and redeemed
through Pershing is reported on IRS Form 1099-INT. If the Treasury
bill was not purchased through Pershing, or if the purchase price was
not made available to us, we use the rate shown in IRS Publication 1212
(this rate is an estimated amount). Your clients may need to adjust
the reported amount in this situation.
–Interest income from foreign bonds
–Credit interest income (total of credit interest earned on
cash balances)
–Interest on short-term discount obligations
–Accrued interest income received on bonds and notes is
reported on a settlement-date basis. Amounts representing
accrued interest sold are identified with the symbol “*” on your
clients’ statements. Accrued interest purchased between interest
payment dates is not included on IRS Form 1099-INT. We report
accrued interest purchased in the Securities Purchased section
of the tax statement. Your clients may need to adjust interest
income for accrued interest purchased.
>INTEREST ON U.S. SAVINGS BONDS AND
TREASURY OBLIGATIONS
–U.S. Treasury bill maturities
–Coupon payments from U.S. Treasury notes and bonds
>FEDERAL INCOME TAX WITHHELD
Federal income tax withheld (backup withholding) is 28% of
interest income.
>FOREIGN TAX PAID
–Interest income earned by certain UITs is also reported on
IRS Form 1099-INT. If the UIT is organized as a grantor trust and
earned interest income, your client’s share of the UIT’s interest
income is reported in this section.
Foreign tax withheld (paid) from foreign source interest income
was credited to your clients’ accounts in 2013.
>TAX-EXEMPT INTEREST
This represents interest on tax-exempt and specified private
activity bonds.
>RETURN OF PRINCIPAL AND NONQUALIFIED
STATED INTEREST
Generally, a return of principal distribution on a bond is not
reportable as taxable, but the distribution reduces the tax basis of
your client’s bond. Nonqualified stated interest reflects periodic
payments on contingent debt securities. If the nonqualified interest
paid was greater than the amount projected by the issuer, the
excess will be reported on IRS Form 1099-INT.
Please note: For 2013 tax reporting, exempt-interest dividends from
a mutual fund or other RIC are no longer reported on Form 1099-INT.
Those amounts will now be reported on Form 1099-DIV, Dividends
and Distributions.
>STATE TAX WITHHELD
This section lists state income tax withholding; the rates vary by state.
Special Message for Owners of Mutual Funds, UITs, WHFITs, WHMTs and REITs
Your clients’ Tax Information Statement may display the following message, if we have not received final reallocation information by the
completion of the phased mailing:
Income and dividends declared on these investments in October, November or December 2013 is considered received on December 31, 2013,
even if the income and dividends was not actually paid until January (in the case of RICs [or mutual funds] and REITs) or February (in the
case of WHFITs and WHMTs) 2014. Accordingly, these amounts are reported on your 2013 Form 1099.
Supplemental information regarding the percentages of tax-exempt income on municipal bond funds by state and the percentage of
government agency, direct federal and foreign source income for funds will be available by March 1, 2014, via mytaxhandbook.com.
38
Nonretirement Product Tax Information
irs form 1099-oid—original issue discount (OID)
>OID DEFINED
>IMPORTANT POINTS
OID is the difference between the stated redemption price at
maturity and the issue price of a bond, debenture, note or other
evidence of indebtedness.
–Your clients may be required to report a portion of this income
even though cash payments were not received.
–Transactions are reported to the IRS on a security-level basis.
>REPORTED OID TRANSACTIONS
–Your client may be required to recalculate OID if an acquisition
premium was paid or if Pershing reported an estimated amount
based on IRS Publication 1212. We now denote if we used
IRS Publication 1212.
–We report OID on corporate bonds, certificates of deposit, CDOs,
CMOs, U.S. government obligations and separate trading of
registered interest and principal of securities (STRIPS) obligations.
–We report other periodic interest on obligations for the year,
which is an amount separate from the OID.
–If an OID instrument was transferred during the tax year into
an account at Pershing, the OID for the period held at Pershing
during 2013 is reported. Your clients should obtain another
IRS Form 1099-OID from the prior firm, which shows remaining
OID portions to be reported.
–If a company is in Chapter 11 or has declared bankruptcy,
Pershing may still be required to report OID income.
irs form 1099-misc—miscellaneous income
>RENTS
>IMPORTANT POINTS
Box 1 of Form 1099-MISC reflects rental income that your client
earned from real estate activities, royalty trusts and any surface
royalties generated from strip mining or other activities. This
amount should be reported on IRS Form 1040, Schedule E. Please
advise your clients to consult with their tax professional to
determine the proper treatment of this income.
–Positions are held in a margin account.
–The dividend amount originally recorded is reduced by the
substitute payment amount.
–Substitute payments are generally the only reporting that is
done for corporations and exempt payee accounts. (For 2013,
the same tax reporting rules generally apply to C and
S corporations.)
>ROYALTIES
The amounts in this section show income earned from royalty trusts.
–Substitute payments are not considered qualified dividends.
>SUBSTITUTE PAYMENTS IN LIEU OF DIVIDENDS
OR INTEREST
The amounts in this section reflect substitute payments in lieu of
dividends or interest credited during 2013. These amounts were
allocated to an account pursuant to IRS regulations and represent
amounts that were credited as a result of a transfer of securities for use
in a short sale. Pershing is authorized to loan a client’s shares for use
in a short sale when the shares are held in a margin account with an
outstanding margin debt. Clients should report substitute payments as
“other income” for tax purposes. We report the substitute payment in
the 1099-MISC section of the Tax Information Statement.
–Supplemental Information for royalty trusts will be provided to
clients by March 17, 2014.
–A tax booklet will be mailed to holders of royalty trusts
separately from their Tax Information Statements.
>STATE INFORMATION
This section displays withheld state income tax; the abbreviated
name of the state and the payer’s state identification number are
displayed. The state number is the payer’s identification number
assigned by the individual state. The amount of the state payment
is also displayed.
>OTHER INCOME
The amounts in this section show other income, such as
substitute payment reimbursements. Report this as “other income”
for tax purposes.
39
Nonretirement Product Tax Information
transactions pershing does not report to the irs
We do not report the following categories of information to the IRS: municipal OID, nonreportable distributions, equity option transactions,
margin interest expense and securities purchased. These items, however, are displayed on Tax Information Statements to help your clients
prepare their tax returns.
>NON-REPORTABLE PROCEEDS AND COST
BASIS INFORMATION
>NONREPORTABLE DISTRIBUTIONS
Partnership Cash Distributions
–Your clients who hold limited partnership interests are sent an
IRS Schedule K-1 directly from the partnership, even though the
position is held in “street name” at Pershing. Pershing is required
by law to provide partner information directly to the partnerships.
Fixed Income
-Sales, maturities and redemptions for short-term discount
debt instruments like U.S. Treasury bills, commercial paper and
government agencies are displayed in this section. The discount
on Treasury bills maturing during 2013 is reported in the 1099-INT
section. Refer to the 1099-INT section of these instructions for
additional information reported for these types of instruments.
–Your clients should contact the partnership’s administrator if
they do not receive their IRS Schedule K-1 (K-1 forms are not
required to be issued on April 15, 2014, unless extended).
Shortfalls
–This section will display payment shortfalls for contingent debt
securities. If the projected payment announced by the issuer is
less than the amount projected by the issuer, the difference is
reflected as a shortfall.
Currency Transactions
-Exchanges of foreign currency for USD and exchanges of foreign
currency for a different foreign currency are displayed in this
section. If the exchange is a forward contract, information related
to that exchange is reported on Form 1099-B. That information
is different than the transactional information provided in this
section, as proscribed by the IRS. If your client has reportable
forward contracts, they are reported in the 1099-B section titled
Foreign Currency Forward Contracts. Please see that section and
the instructions that follow it for more information.
Equity Option Transactions
-If your client traded or held an equity option(s) during 2013, we
may display certain activities (for example, sales, purchases and
expirations) related to those options in this section of the Tax
Information Statement.
Please note: This section will only be displayed for accounts
receiving the TYES. This data is provided to your clients for
informational purposes only.
>MUNICIPAL OID
Return of Principal Distributions and Nonqualified Stated Interest
–Generally, returns of principal distributions are not reportable
as taxable income, but the distributions reduce your client’s
tax basis. Your client should consult a tax professional for
more detailed information. Nonqualified stated interest
reflects periodic payments on contingent debt securities. If the
nonqualified interest paid was greater than the amount projected
by the issuer, the excess will be reported on IRS Form 1099-INT.
>Advisory Fees
–This optional feature displays certain advisory fees charged
during 2013. Advisory fees are generally deductable to the
extent they exceed 2% of your client’s AGI on IRS Form 1040,
Schedule A, line 23.
>EQUITY OPTIONS TRANSACTIONS
–Municipal OID subject to the alternative minimum tax (AMT)
–Equity options transactions include activities related to sales,
purchases, exercises, assignments and expirations of equity options.
–Municipal OID not subject to AMT
–We do not report these transactions to the IRS.
>IMPORTANT POINTS
–Accrued interest received on municipal notes and bonds sold
between interest payment dates is reported on a settlementdate basis and is included in the tax-exempt interest income
category. Amounts representing accrued interest sold are
identified with the symbol “*” on your clients’ statements. It may
be necessary to reduce the amount of the tax-exempt interest
income category by the amount of accrued interest purchased.
–If municipal bonds issued with OID were transferred to Pershing
during 2013, we only calculate OID for the period during which
the instruments were held at Pershing.
Please note: This section will only be displayed for accounts not
receiving the YTIS.
>SECURITIES PURCHASED
–Securities Purchased includes all security purchases (except options).
–Securities Purchased includes accrued interest purchased on bonds.
Please note: This section will only be displayed for accounts
receiving the YTIS. The TYES provides the cost basis information
within the various Form 1099-B subsections.
>MARGIN INTEREST EXPENSE
Your clients should refer to their tax professional or obtain
IRS Form 4952, Investment Interest Expense Deduction, for more
information on margin interest expense.
40
Nonretirement Product Tax Information
mailing schedule
Phased Mailing Schedule for Client Tax Reporting
For the 2013 tax year, Pershing will mail IRS Form 1099 (B, DIV, INT, OID and MISC) in phases. Pershing will evaluate each account and whether
we have received final tax information for each security. We expect the new method will significantly accelerate the issuance of original 1099 forms
and reduce the incidence of publishing revised forms. Importantly, it will provide greater transparency in the tax reporting process for both you and
your clients. The phased mailing schedule is outlined below.
Mailing
Phase
Scheduled Date
Mailing Event
1
January 31
1.Form 1099 mailing will occur for accounts with no income reclassifications pending from issuers.
Generally, this includes accounts holding simple debt or equity-only investments and options1.
2
February 182
1.Form 1099 mailing will occur for accounts for which we are able to include previously pending
income reclassifications from issuers of mutual funds, certain UITs, REITs and certain equities,
because the issuer or trustee has provided Pershing final tax information.
Generally, this includes accounts holding mutual funds with high incidences of reclassification1.
2.Pending 1099 Notice mailing for accounts for which we are awaiting data from issuers. The Notice
will list investments that are awaiting information from issuers or trustees and indicate the possible
mail date of 1099 forms.
This notice, which will be available in e-Document Suite, will be mailed when issuers of taxable
income are unable to provide final tax information before February 18. This letter will identify the
income impacting the mail date.
3.Revision mailing for 1099s sent in Phase One, as required.
3
February 28
1.Form 1099 mailing will occur for accounts for which we are now able to include previously pending
income reclassifications from issuers of mutual funds, REITs and certain equities, because the issuer
or trustee has provided Pershing with final tax information.
Generally, this includes accounts holding mutual funds with high incidences of reclassification1.
2.Revision mailing for 1099s sent in Phases One and Two, as required.
4
March 173
1.Form 1099 mailing will occur for all remaining accounts, regardless of whether pending income
reclassifications for the account’s income have been received from issuers
Generally, this includes accounts holding complex nonequity securities, such as REITs, certain
equities, UITs, REMICs, WHFITs and royalty trusts.
2.Revision mailing for 1099s sent in all previous phases, as required.
1
his information is provided for illustrative purposes only. Holding only these types of securities does not guarantee that your clients’ tax statements will be mailed on the
T
indicated date.
2
ershing’s annual practice is to request and obtain an extension from the IRS to the February 15 date on which we are required to mail IRS Forms 1099 (B, DIV, INT,
P
OID and MISC). In anticipation of obtaining this extension—and since February 15, 2014, falls on a Saturday and the Presidents’ Day holiday is observed on Monday,
February 17—this phase of the mailing will occur on February 18.
3
Pershing’s 30-day extension to the mailing requirement will accommodate this phase of the mailing. Since March 15 falls on a weekend, the mailing will occur on the next
business day.
Please note: If cost basis information is adjusted for covered securities
transactions, it may result in a revised Tax Information Statement since,
typically, the 1099-B form will be updated. If cost basis information is
adjusted for noncovered securities transactions, a revised tax statement
will typically not be produced. If your client would like to receive a
new statement inclusive of cost basis adjustments for noncovered
transactions, you should request a duplicate statement. The request
should be made after the update is made to the account. See page 54 for
how to request a duplicate statement.
As information becomes available to us subsequent to the initial Tax
Information Statement phased mailing, we process this information
and provide a revised Tax Information Statement to your clients. Tax
Information Statements may be revised for any of the following reasons:
– Reclassified income
– Changed foreign tax withholding
–Adjusted income paid
– Cancelled trades or “as of” trades appear on tax statements
–Updated OID rates
– Changed TIN
–Adjusted cost basis information for a covered security transaction
41
Nonretirement Product Tax Information
reclassified income
It may be necessary to reclassify previously reported distributions to another category, since the tax status of payments made by
corporations, mutual funds, UITs, WHFITs and REITs can only be determined after the end of the tax year. Some of these companies, funds
and trusts may not furnish their classifications before we mail the Tax Information Statements to your clients. As a result, we may issue
revised Tax Information Statements to clients who received distributions from one or more of these companies, if the information is received
after initial tax statements are mailed.
Typically, reclassifications involve the following categories:
–Ordinary dividends*
– Qualified dividends*
– Capital gain distributions*
• Unrecaptured Section 1250 Gain*
• Section 1202 Gain*
• Collectibles (28%) Gain*
–Nondividend distributions*
–Liquidation distributions*
– Tax-exempt income from specified private activity bonds
– Tax-exempt interest
>IMPORTANT POINTS
When reclassification information is made available, revised Tax
Information Statements may be printed to reflect the corrected
reporting amounts. The Revised Tax Summary precedes the
revised Tax Information Statement and details all reclassifications,
additions, deletions and changes. Reclassifications will be
processed and mailed based on the schedule of deadlines and
actions found within Pershing’s tax calendar, “Tax Reporting—
Important Dates.” The calendar is available through the Tax
Reporting Tools and Resources portal in Resources via NetX360
(search key word “tax-info”).
Please note: The Tax Information Statement revision schedule
is subject to change. Pershing may need to adjust the revision
schedule based on the timing of tax information received from
mutual funds and REITs.
* Refer to page 37
>UIT AND WHFIT REPORTING
Income from UITs and WHFITs will be reported based on information
from the UIT administrators. This is necessary to distinguish the
various types of income that a UIT and WHFIT could generate, such
as interest income, tax-exempt income, income from specified private
activity bonds, qualified dividend income, nonqualified dividend
income or OID. Your clients who own UITs and WHFITs will see the
following information on their Tax Information Statements:
–Foreign tax rates on RIC’s foreign source income are generally
received after the initial mailing. As this information becomes
available, it will be forwarded to your clients.
–We engage an external vendor to collect income reclassification
information for RICs. By obtaining this information in a timely
manner, we can greatly reduce the number of revised Tax
Information Statements processed.
–Income Classification: Income from UITs and WHFITs will be
reported in one or more of the Form 1099-DIV, 1099-INT or
OID sections of the Tax Information Statement, depending on
the nature of the income.
–If you know of companies that reclassify their income after yearend, provide us with a copy of the information on the company’s
letterhead. All reportable accounts holding that position will
be updated.
–Accrual-Based Reporting: Income will be reported on the Tax
Information Statement as it is earned by the UITs and WHFITs,
which may differ from the date the UIT and WHFIT distribute
the income. In the 1099-DIV and 1099-INT sections, separate
entries will be displayed for income that is received in cash and
for accrued income.
–Revision information is updated in TXAS after the revisions are
processed and may be accessed using the Tax Report Inquiry
screen in NetX360 (see page 53 for additional information).
–Revised Tax Information Statements, including the revised tax
summary statement page, are also uploaded to e-Document
Suite in NetX360 after processing. Copies of individual account
holder statements may be obtained from this system.
–
Additional Data: Tax Information Statements will show
“Investment Expenses” and “Foreign Tax Paid” as separate
categories when the UIT and WHFIT administrator includes this
data in the information provided to us.
–You can access Report Center to view a list of accounts being revised.
42
Nonretirement Product Tax Information
correcting tax information statements
Service Center Requests
>IMPROPER TAX INFORMATION STATEMENTS
All 1099 correction requests (current and two prior tax years) should be
submitted via the correct path in Service Center on the NetX360 platform.
To correct a foreign account for a foreign client who received a Tax
Information Statement in error, update the following documents:
Form 1099-B cost basis inquiries should be submitted via Service
Center with the following path: Other Products/Misc > Tax Reporting
> Cost Basis Reporting. All other Tax Information Statement
correction requests should be submitted via Service Center with
the following path: Other Products/Misc > Tax Reporting > Tax
Information Statement. Please consult the Tax Help Desk if you have
any questions regarding the proper path. Requests not submitted via
the correct Service Center path will be rejected and the requestor will
be required to resubmit.
–Obtain IRS Form W-8 BEN, W-8 ECI, W-8 EXP, W-8 IMY or
W-8CE from the account owner and update the account’s
records in accordance with your normal procedures.
–Submit a tax correction request via Service Center to Pershing’s
Tax Reporting department.
Please note: Foreign accounts should only receive a Tax
Information Statement if federal tax (backup withholding)
is withheld.
Current year (2013) retail 1099 corrections due to SSN or TIN
updates are processed systematically until June 30, 2014.
>REVISED TAX INFORMATION STATEMENTS
Any revisions to the current consolidated tax information statements
received before June 30 will post to e-Document Suite. After June 30,
only reportable transactions will be posted to Imaged Documents,
with an actual IRS Form 1099. No consolidated tax statement format
will be offered, and, consequently, nonreportable transactions cannot
be provided to your clients.
Please note: “Prior year” SSN and TIN updates must always
be submitted via Service Center with the following path: Other
Products/Misc > Tax Reporting > Exempt Status or TIN Changes,
as they will not occur systematically. All requests for 1042-S and
480.6 corrections, federal and state withholding reversals or
nonresident alien tax reversals must be submitted via the proper
path in Service Center. Please submit via Service Center with
the following path: Other Products/Misc > Tax Reporting > 1042-S
Tax Correction, or 480.6 Tax Correction.
>REVIEW OF CORRECTION REQUESTS
Requests for corrections are reviewed upon receipt and may be
approved once we receive the necessary documentation. Once current
tax year requests are approved and processed, the most current
information can be viewed in e-Document Suite. Previous tax year
corrections are made available within imaged documents.
>SUPPORTING DOCUMENTATION
You may attach supporting documentation within your Service
Center request, such as an issuer announcement or copy of an
investor relations page.
>WHOm TO CONTACT WITH QUESTIONS
Please note: A scan of the 1099 section with notes and comments
would be greatly appreciated. Please circle the transaction detail(s)
that require a modification.
Our Tax Reporting Help Desk provides you with a centralized
source of information and assistance for tax reporting issues. For
calls originating within the United States, please call our toll-free
number at (800) 699-9965. Outside of the U.S., please call (201)
413-4200 and say, “Tax Reporting,” to be routed for assistance.
Please note: The help desk associates are not authorized to offer
tax advice.
CD-ROM Requests—Additional Copies
Requests for 1099s for tax years 2005 through 2013 should not be submitted via Service Center. To provide your office with immediate access to
your client’s 1099 year-end tax information, these statements are available to review and print in e-Document Suite via NetX360.
In addition, for recordkeeping purposes for each year from tax years 2001–2013, Pershing provided a CD-ROM that contained 1099 tax statements
for all accounts for which we produced a year-end 1099 statement. You may use the CD-ROMs provided to obtain copies of your client’s 1099
tax statements for these tax years. If your 2001–2013 CD-ROMs have been misplaced or damaged, you can request another CD by filling out the
“Request for Tax Information Statements” form located on page 44.
The tax statement is available in e-Document Suite via NetX360. As a service, we will provide you with a CD-ROM containing your clients’
Tax Information Statements for tax year 2013, if you had 10 or more accounts with a tax statement for the year.
43
Nonretirement Product Tax Information
R e q u e st F o r T a x In f o r m a t i o n S t a t e m e n ts
Fax to Pershing’s Tax Reporting department at (201) 433-4199.
Please print or type all information:
Name:
telephone number:
Sundry account number to be charged:
Deliver to (NamE):
Address:
City:State:zip code:
Note: This form should not be used to request duplicate monthly statements on individual accounts.
CD-ROM requests – Additional copies
CD-ROMs can be ordered.
o CD-ROM – firm Sort, copy for introducing broker-Dealer number:
This will include all 1099 Tax Information Statements for the selected firm.
o CD-ROM – Specific Office Sort, for Office(s):
This will include all 1099 Tax Information Statements for the selected office range(s) for your firm.
Note: A fee will be charged to your sundry account. See Schedule A regarding costs associated for ordering additional CDs. Schedule A reflects the
cost for CDs for the prior year (for example CDs for 2011 1099 CDs ordered in 2012). If CDs are needed for earlier years there may be additional
costs involved as charged by our CD vendor.
If you have any questions, please contact the Pershing Tax Reporting Help Desk at (800) 699-9965 or (201) 413-4200 for calls originating outside of
the United States.
44
Nonretirement Product Tax Information
aCCounts exeMpt FroM tax reporting
Accounts are generally subject to IRS Form 1099 tax reporting unless they meet the criteria for exemption. A list of the exemption criteria
is provided in the Instructions to IRS Form W-9, Request for Taxpayer Identification Number and Certification. The most common types of
accounts exempt from IRS Form 1099 tax reporting are listed below.
–Corporations (C and S corporations) that are financial organizations (for example, a bank or broker-dealer) generally can designate
themselves as exempt recipients by completing Form W-9 and completing the “Exempt payee” line, although additional documentation
may be required
–Qualified retirement accounts (including IRAs and Roth IRAs)
–Qualifying charitable organizations
–Foreign accounts (provided a valid IRS Form W-8 BEN, W-8 ECI, W-8 EXP, W-8 IMY or W-8CE is on file)
–Most federal, state and local government accounts
Please note: S corporations that have provided a Form W-9 and checked the “exempt” box can expect to be issued a 1099-B form that only
includes reporting and tax withholding related to the disposition of covered securities. No other 1099 information reporting will be sent
for these accounts (e.g., 1099-DIV, INT, OID, MISC and 1099-B representing noncovered sales). S corporations that have provided a Form
W-9 and did not check the “exempt” box, or were determined to be an S corporation by default by not returning a Form W-9, can expect to
be issued a complete 1099, including all of their reportable income. Pershing no longer requests that your firm submit IRS forms W-9 and
W-8 when making certain changes to an account’s registration. Instead, the Change in Account Registration Form is available for your use.
Requests by your firm for certain account changes must be accompanied by this form.
FeDeral tax WithholDing (baCKup WithholDing)
>BACKUP WITHHOLDING DEFINED
>CLAIMING BACKUP WITHHOLDING
Backup withholding is a federal tax that we are required to
withhold from certain reportable payments. Backup withholding
applies to payments made that are reportable on IRS Form 1099B, 1099-DIV, 1099-INT, 1099-MISC or 1099-OID, and is reported
as Federal Tax Withheld in the applicable section of the Tax
Information Statement.
–U.S. citizens (and residents for tax purposes) should claim backup
withholding as tax payment on their federal income tax returns.
–Foreign clients may claim backup withholding on IRS Form 1040-NR,
U.S. Nonresident Alien Income Tax Return, or IRS Form 1120-F,
U.S. Income Tax Return of a Foreign Corporation.
–Tax-exempt entities and corporations may claim backup withholding
on either IRS Form 990-T, Exempt Organization Business Income
Tax Return, which is used by tax-exempt organizations.
Backup withholding applies to reportable payments if:
–Your client fails to provide a valid TIN.
–Your client fails to certify a TIN on an IRS Form W-9 for accounts
opened after December 31, 1983.
–The IRS mandates backup withholding due to an incorrect match
between the client name and TIN provided. This IRS notification
is referred to as a “B” Notice.
–The IRS mandates backup withholding because of underreported
interest or dividends on tax returns. This IRS notification is
referred to as a “C” Notice.
45
Please note: During 2014, the federal backup withholding tax
rate remains at 28% and will continue to apply to reportable
payments of dividends, interest and proceeds from the sales of
securities made to undocumented U.S. taxable accounts. The
American Taxpayer Relief Act of 2012 did not affect the backup tax
withholding rate.
Nonretirement Product Tax Information
FeDeral tax WithholDing (baCKup WithholDing)
REASON FOR WITHHOLDING
HOW TO STOP WITHHOLDING
Client has not provided his or her TIN or has not certified his
or her TIN
If your client failed to provide a valid TIN, failed to certify his or her TIN
by providing a Form W-9 or was issued a first “B” Notice and did not
provide a Form W-9 showing the correct name and TIN, then he or she
should complete IRS Form W-9, Request for Taxpayer Identification
Number and Certification. Then, have someone at your firm certify the
form on Pershing’s Documentation, Recording and Tracking (KUST)
system. (Only U.S. firms may certify TINs in this manner.)
“B” Notice—Notification from the IRS of name or TIN mismatch
If your client was issued a second “B” Notice, did not request a printout
from the Social Security Administration (SSA) and did not provide a copy
to you, then he or she should contact the SSA to request the printout and
provide it to your firm. Samples of the First “B” Notice letter, the Second
“B” Notice letter, a blank W9BN form, IRS Form W-9 Instructions and the
IRS “B” Notice can be located in Marketing Center in NetX360 using the
keyword search phrase “IRS B-Notices.”
Please note: If the pre-completed W9BN form is lost, please make sure
your client completes a blank W9BN form (not IRS Form W-9). Only the
W9BN form will be accepted to discontinue the mandatory withholding.
The completed W9BN form must be signed and dated by your client and
returned to Pershing.
“C” Notice—Notification from the IRS stating that we must
withhold tax from interest and dividends because the IRS
determined that an individual underreported interest and
dividends on the tax return
If the IRS notified Pershing that your client underreported interest or
dividend income and was subject to the IRS “C” Notice, ask your client
to have the IRS send Pershing a stop letter to discontinue backup
withholding.
MiniMuM aMounts to be reporteD anD Due Dates
IRS Form
Minimum Amount to Report
2014 Date Due to the IRS1
2014 Date Due to Your Clients1
1099-B
All
March 31
5
February 152
1099-DIV
$10 or more
($600 or more
for liquidations)
March 315
February 152
1099-INT
$10 or more
March 315
February 152
1099-OID
$10 or more
March 315
February 152
1099-MISC
Generally
$10 or more
March 315
February 152
1042-S
All
March 156
March 15
480.6 (A, B, C, D)
All
February 28
February 15
2439
All
March 15 (for calendar-year mutual
funds and REITs)
60 days after the mutual
fund’s or REIT’s tax year end
CDO, CMO, REMIC
Additional Statement
All
N/A
March 153
WHFIT Additional Statement
Generally $10 or more
N/A
March 153
K-1 (from calendar-year
partnerships and trusts)
All
April 15
April 15
4
1
hese are original due dates, which may, in certain circumstances, be extended to later dates in 2014. If any date falls on a Saturday, Sunday or legal holiday, the return is considered timely if
T
filed or furnished on the next day that is not a Saturday, Sunday or legal holiday.
2
he February 15 due date applies when the forms are included in a “composite form recipient statement” as defined by the IRS. Pershing expects to receive a 30-day extension for this due
T
date and plans to complete mailing to all recipients by March 17, 2014.
3
The due date is extended to March 17, 2014, for trustees and middlemen of CDOs, CMOs, REMICs and WHFITs.
4
K-1s are issued by the respective partnerships and trusts, not by Pershing.
5
Pershing expects to receive a 30-day extension from the IRS and will report the information to the IRS by April 30, 2014.
6
Pershing expects to receive a 30-day extension from the IRS and will report the information to the IRS by April 15, 2014.
46
Nonretirement Product Tax Information
state/agenCY inForMation
In addition to sending information to the IRS, Pershing will also send the following information to the taxing authorities of the following
states, government agencies and Puerto Rico:
STATE/AGENCY
INFORMATION
FILED
California
Non-California municipal bond interest paid to accounts with California addresses
June 1, 2014
Connecticut
Non-Connecticut municipal bond interest paid to accounts with Connecticut addresses
April 4, 2014
Delaware
Miscellaneous income paid to accounts with Delaware addresses
February 28, 2014
District of Columbia
Proceeds, interest, dividends and miscellaneous income paid to accounts with District
of Columbia addresses
February 28, 2014
Kentucky
Account identification and asset information on taxpayers identified by the
Commonwealth of Kentucky
Quarterly
Maine
Proceeds, interest, dividends and miscellaneous income paid to accounts with
Maine addresses
February 28, 2014
Massachusetts
Proceeds, interest, dividends and miscellaneous income paid to accounts with
Massachusetts addresses
February 28, 2014
Minnesota
Non-Minnesota municipal bond interest paid to accounts with Minnesota addresses
June 1, 2014
Montana
Proceeds, interest, dividends and miscellaneous income paid to accounts with
Montana addresses
February 28, 2014
Non-Montana municipal bond interest paid to accounts with Montana addresses
New York
Non-New York municipal bond interest paid to accounts with New York addresses
June 1, 2014
North Carolina
North Carolina municipal bond interest paid to accounts with North Carolina addresses
April 1, 2014
Oklahoma
Proceeds, interest, dividends and miscellaneous income paid to accounts with
Oklahoma addresses
February 28, 2014
Office of Child Support
Enforcement (OCSE)
Account identification and asset information on taxpayers identified by a U.S. state
as being delinquent in child support owed to the state is collected by OCSE, a
government agency, and provided to the state reporting the deficiency
Quarterly
Oregon
Miscellaneous income paid to accounts with Oregon addresses
March 31, 2014
Puerto Rico
Interest, dividends, proceeds and partnership distributions paid to accounts with
Puerto Rico addresses (tax statements 480.6A and 480.6B are mailed to your clients)
(480.6B forms are mailed to all accounts with Puerto Rico tax withholding) 480.6C is
mailed to nonresidents of Puerto Rico with Puerto Rico income subject to withholding
480.6D reflects interest income needed to determine alternative basic tax exposure
February 28, 2014
Rhode Island
Non-Rhode Island municipal bond interest paid to accounts with Rhode Island addresses
June 1, 2014
South Carolina
Proceeds, interest, dividends and miscellaneous income paid to accounts with South
Carolina addresses
February 28, 2014
Wisconsin
Miscellaneous income paid to accounts with Wisconsin addresses
February 28, 2014
47
Nonretirement Product Tax Information
irs ForM 1042-s—Foreign person’s u.s. sourCe inCoMe subjeCt to WithholDing
Federal tax law requires separate reporting of certain U.S. source transactions when an account holder is a non-U.S. (foreign) person. Foreign
account holders are generally not subject to IRS Form 1099 information reporting and backup withholding. These account holders are subject
to IRS Form 1042-S reporting and nonresident alien tax withholding.
>FORM RECIPIENTS
>IMPORTANT POINTS
–Nonresident alien individuals
–Foreign partnerships
–Foreign corporations
–Foreign estates and trusts
–March 17, 2014, is the due date for mailing IRS Form 1042-S
statements.
–Dividends from certain money market funds are reported on
IRS Form 1042-S. Clients will receive a separate IRS Form 1042-S
directly from the money market fund if Pershing did not handle
the processing of the fund for the entire year.
>TRANSACTIONS REPORTED
–Interest, including bank deposit interest
–Dividends
–Publicly traded partnership distributions
–Trust distributions
–Federal taxes withheld
–Capital gains
–Returns of capital
–Substitute payments
– Deposit Interest
Sample Statement
–An Income Reclassification section displays before and after
information if income was reclassified from how it was initially
paid. A sample of this section is displayed on page 49. If income
is reclassified from taxable to nontaxable, we will reflect any
refund of withheld taxes in this section. Your clients will receive
their tax refunds prior to the mailing of the 2013 1042-S yearend tax statements. A Revision section will display if there are
any adjustments made to the income or withholding amounts
after the initial 1042-S mailing.
48
Nonretirement Product Tax Information
irs ForM 1042-s—Foreign
person’s u.s. sourCe inCoMe 2013
subjeCt
to WithholDing
**** SAMPLE ACCOUNT *****
TAX INFORMATION STATEMENT
Recipient’s Name:
Account Number:
JANE DOE
ABC-123456
2013 Form 1042-S
Transaction Details
Section 01 – Income Code 01: Interest paid by U.S. Obligors – general, Tax Rate: 0.00%, Exemption Code 05: Portfolio interest exempt under an Internal Revenue Code section
CUSIP
Process Date
BAC CAP TR TX
6.25% MAT 3/29/55
CAP SEC PFD
055189203
03/31/2013
06/30/2013
09/29/2013
376.95
376.95
376.95
1,130.85
CITIGROUP CAP XV
ENHANCED TR PFD SECS
6.50% 9/15/66 SERIES
17310G202
03/17/2013
06/16/2013
09/15/2013
402.19
402.19
402.19
1,206.57
CITIGROUP INC SUN NT
5.00% 09/14/14 B/E
DTD 09/16/04 CLB
172967CQZ
09/15/2013
500.00
GENERAL ELEC CAP
CORP 6.00% PUBLIC
INCOME NT PINES
369622451
07/24/2013
10/24/2013
600.00
600.00
1,200.00
GENERAL MTRS ACCEP
CORP SR NT
5.625% 05/15/10 B/E
3704255J0
05/15/2013
28,125.00
INDYMAC BK F S B
PASADENA CALIF
CTF DEP ACT/365
45660RA63
01/02/2013
02/01/2013
03/07/2013
108.29
108.29
122.26
338.84
INTERNATIONAL LEASE
FIN CORP SR NT
4.750% 07/01/10 B/E
459745FM2
07/01/2013
23,750.00
MGM GRAND INC SR
COLL BD
6.000% 10/01/10 B/E
552953AF8
04/01/2013
10/01/2013
7,500.00
7,500.00
15,000.00
61746SAM1
03/14/2013
MORGAN STANLEY NT
FLTG RATE
Recipient’s Name: **** SAMPLE ACCOUNT *****
0.000% 03/14/08 B/E
Account Number:
Federal Tax Withheld
(Box 7)
6,543.78
2013 TAX INFORMATION STATEMENT
JANE DOE
ABC-123456
2013 Form 1042-S
Sample Statement
Gross Income
(Box 2)
Description
Transaction Details
(Continued)
Section 01 – Income Code 50: Other income, Tax Rate: 0.00%, Exemption Code 00: No exemption
Seq.#(ABC000001)
Description
CUSIP
Process Date
WELLS FARGO CAP VII
GTD TR PFD SECS
5.85% MAT 05/01/33
94979B204
08/01/2013
11/03/2013
Section 01 Total
Gross Income
(Box 2)
Federal Tax Withheld
Page 2 of 4
(Box 7)
365.63
365.63
731.26
78,526.30
0.00
Gross Income
(Box 2)
Federal Tax Withheld
(Box 7)
325.89
48.88
Section 02 – Income Code 06: Dividends paid by U.S. Corporations – general, Tax Rate: 15.00%, Exemption Code 00: No exemption
Description
CUSIP
Process Date
ISHARES TR S&P 500
INDEX FD
464287200
09/30/2013
ISHARES TR 1 3 YR
TREAS INDEX FD
464287457
10/07/2013
Section 02 Total
Grand Total
469.00
70.35
794.89
119.23
79,321.19
119.23
Page 3 of 4
Seq.#(ABC000001)
Please note: This section will be displayed as the initial pages of your clients’ Form 1042-S Tax Information Statement if they have income
reported on this form that was reclassified.
49
Nonretirement Product Tax Information
ForM 480.6—puerto riCo tax inForMation reporting
We are required to report certain tax information to your clients and to the Commonwealth of Puerto Rico for nonresidents of Puerto Rico
who are invested in Puerto Rico securities. This information is reported on Puerto Rico 480.6 forms. The due date for mailing the 2013 forms
to payees and for reporting the information to the government of Puerto Rico is February 28, 2014. There are four 480.6 forms: 480.6A,
480.6B, 480.6C and 480.6D.
Our 480.6 Tax Information Statements include the following sections in both English and Spanish:
–Introduction Page—This page includes basic information regarding the types of 480.6 forms included in the statement.
–Puerto Rico 480.6 Form(s)—These 480.6 forms are reported for the account. These are approved substitute forms based on Puerto Rico
requirements. Two copies of each form are included.
–Summary Information—This section includes summary totals of the information reported.
–Detail Information—This section includes transaction details of the information included in the summary amounts reported.
>480.6A FORM
>480.6C FORM
Reports interest, partnership distributions, dividends, other
payments and gross proceeds paid
Reports income subject to withholding for nonresidents of Puerto Rico
>480.6D FORM
>480.6B FORM
Reports interest income needed to determine alternative basic
tax exposure
Reports dividends paid and Puerto Rico source withholding tax
>SUMMARY INFORMATION SECTION—480.6A, 480.6B AND 480.6D
This is a sample of the summary section of the 480.6 statement if information is reported for any combination of 480.6A, 480.6B
and 480.6D forms.
Resumen del Formulario 480.6A del Gobierno de Puerto Rico
Summary of Puerto Rico Government Form 480.6A
Linea/Line
Intereses (excepto IRA y Cuenta de Aportación Educativa) - Interest
(except IRA and Educational Contribution Account)
5
Sample Statement
6
Dividendos - Dividends
7
Distribuciones de Sociedades - Partnership Distributions
8
9
Otros Pagos - Other Payments
Redito Bruto - Gross Proceeds
Resumen del Formulario 480.6B del Gobierno de Puerto Rico
Summary of Puerto Rico Government Form 480.6B
Cantidad/Amount
Linea/Line
10,000.00
4
Dividendos - Dividends
20,000.00
4
Cantidad Retenida - Amount Withheld
500.00
6
Intereses (excepto IRA y Cuenta de Aportación Educativa) Interest (except IRA and Educational Contribution Account)
30,000.00
40,000.00
6
Cantidad Retenida - Amount Withheld
Resumen del Formulario 480.6D del Gobierno de Puerto Rico: Linea 10
Summary of Puerto Rico Government Form 480.6D: Line 10
Código/Code
A
Intereses sobre ciertas obligaciones y valores - Interest from certain
obligations and securities
Cantidad/Amount
10,000.00
1,000.00
20,000.00
2,000.00
Resumen del Formulario 480.6D del Gobierno de Puerto Rico: Linea 11
Summary of Puerto Rico Government Form 480.6D: Line 11
Cantidad/Amount
1,000.00
B
Intereses sobre ciertas hipotecas - Interest from certain mortgages
2,000.00
C
Intereses sobre ciertos préstamos - Interest from certain loans
3,000.00
50
Código/Code
Cantidad/Amount
A
Dividendos y distribuciones provenientes de corporaciones de
dividendos limitados - Dividends and distributions from limited
dividends corporations
6,000.00
B
Dividendos y distribuciones provenientes de asociaciones
cooperativas - Dividends and distributions from cooperative
associations
7,000.00
Nonretirement Product Tax Information
ForM 480.6—puerto riCo tax inForMation reporting
>SUMMARY INFORMATION SECTION—480.6C
Sample Statement
This is a sample of the summary section of the 480.6 statement if information is reported for a 480.6C form.
Resumen del Formulario 480.6C del Gobierno de Puerto Rico
Summary of Puerto Rico Government Form 480.6C
Linea/Line
Cantidad/Amount
4
Dividendos - Dividends
4
Cantidad Retenida - Amount Withheld
7
Intereses - Interest
7
Cantidad Retenida - Amount Withheld
20,000.00
2,000.00
10,000.00
1,000.00
>DETAILed INFORMATION SECTION
This is a sample of a detailed information section. This section contains details for the summary information reported on the 480.6 forms
included in the 480.6 Tax Information Statement.
Sample Statement
TRANSACION DETALLE PARA PARTIDAS INFORMADAS EN EL FORMULARIOS 480.6B / PUERTO RICO GOVERNMENT FORM 480.6B DETAILS
Linea 6 - Intereses (excepto IRA y Cuenta de Aportación Educativa) / Line 6 - Interest (except IRA and Educational Contribution Account)
Descripción del título valor / Security Description
PR Security 1
CUSIP
123456789
Fecha de pago/ Date Paid
01/25/2013
02/25/2013
PR Security 2
234567890
01/25/2013
02/25/2013
Linea 6 Totale/Line 6 Total
51
Cantidad Pagada / Amount Paid
100.00
100.00
200.00
Cantidad Retenida / Amount Withheld
10.00
10.00
20.00
200.00
200.00
400.00
20.00
20.00
40.00
600.00
60.00
Nonretirement Product Tax Information
irs ForM 2439—notiCe to shareholDer oF unDistributeD long-terM Capital gains
Certain RICs elect to pay federal income tax on undistributed long-term capital gains. Your clients holding positions in these RICs as of the
RICs’ year-end receive IRS Form 2439. This form reports a client’s shares of undistributed long-term capital gains and the federal tax paid by
his or her RICs. Your clients should include this capital gain in their income and they are entitled to claim a credit on their income tax returns
for their shares of the federal tax paid by the RICs issuing Form 2439.
>IMPORTANT POINTS
–The Depository Trust and Clearing Corporation (DTCC) provides
us with information for IRS Form 2439 reporting.
–Although Pershing receives the rates used to calculate items on
IRS Form 2439 from the DTCC, we cannot mail IRS Form 2439 to
your clients until we receive copies from the DTCC showing the
amount of the RIC’s long-term capital gain paid to Pershing and
the amount of tax paid by the RIC.
–IRS Form 2439 information is not included on the Tax
Information Statement.
–The date on which IRS Form 2439 is mailed varies depending on
the RIC’s year-end for tax purposes.
–Some companies or funds typically declare undistributed
long-term capital gains. In the example that follows below, the
company is expected to provide tax information for 2013 that is
reportable on IRS Form 2439.
–Pershing claims a tax credit for the tax paid by RICs issuing Form
2439s for IRAs and other retirement accounts for which Pershing
LLC is the retirement account custodian. Pershing credits IRAs
and the other retirement accounts accordingly.
VOID
Sample Tax Form
Name, address, and ZIP code of RIC or REIT
–The forms will be loaded to e-Document Suite in NetX360 in the
week following the recipient mailing.
CORRECTED
(99)
OMB No. 1545-0145
Notice to Shareholder of Undistributed
Long-Term Capital Gains
22013
Form
2439
For calendar year 201• •, or other tax year
of the regulated investment company (RIC) or the
real estate investment trust (REIT)
, 2013, and
beginning
ending
, 20
Identification number of RIC or REIT
1a Total undistributed long-term capital gains
Shareholder’s identifying number
1b Unrecaptured section 1250 gain
Shareholder’s name, address, and ZIP code
1c Section 1202 gain
Copy A
1d Collectibles (28%) gain
2 Tax paid by the RIC or REIT on the box 1a gains
Form
2439
Cat. No. 11858E
www.irs.gov/form2439
52
Attach to
Form 1120-RIC
or Form 1120-REIT
For Instructions
and Paperwork
Reduction Act
Notice, see back of
Copies A and D.
Department of the Treasury - Internal Revenue Service
Nonretirement Product Tax Information
txas—tax reporting sYsteM/teFra
TXAS allows you to view reportable tax transactions. The primary features of the system include:
–Quick retrieval of specific client Tax Information Statements
–Access to reclassified information
–Updated information on reclassification of dividends and capital gains
–The ability to review updates and confirm that Tax Information Statements were updated and mailed to clients
– Request to include advisory fees in the YTIS
–Ability to hold a tax statement mailing until the following production schedule
ACCESSING THE TXAS—TAX REPORTING SYSTEM/TEFRA
Sample screenshot
To access the TXAS Main Menu in NetX360, from the Service and Operations tab, choose OpsCenter, then choose TXAS from the
Online Applications Menu.
TXAS SCREENS
TAX SCREEN
DESCRIPTION
TAX RATE INQUIRY
View detailed reclassification information for a specific CUSIP
TAX RATE BROWSE
View a list of all reclassifications displayed in CUSIP order
PRINT REQUEST ADD
Request a duplicate copy of a statement or Hold a print of a revised statement
PRINT REQUEST BROWSE
View a list of all requests for duplicate copies
TAX REPORT INQUIRY
View a client’s Tax Information Statement
PRODUCT/CUSIP
Browse View securities on a client’s statement by product type or CUSIP
ACTIVITY LOG BROWSE
View revisions whenever a statement is updated
PUERTO RICO INQUIRY
View tax statement 480.6A, 480.6B, 480.6C and 480.6D reporting to the Commonwealth of Puerto Rico
ADVISORY FEES ENROLLMENT
Request Advisory Fees to be included within your clients’ Tax Information Statement
TAX RATE INQUIRY SCREEN
To access the Tax Rate Inquiry screen, choose Tax Rate Inquiry from the TXAS Main Menu.
To view the reclassification rate, type “1” in the RATE TYPE field and press Enter. To view reclassification information for a specific CUSIP,
enter the CUSIP in the CUSIP field and press Enter.
53
Nonretirement Product Tax Information
txas—tax reporting sYsteM/teFra
The following information will automatically be displayed:
FIELD
DESCRIPTION
RUN DATE
Date the reclassification was entered into the TXAS system
PRODUCT TYPE
Original classification
PRODUCT TYPE
Components of the reclassification, which may contain up to three product codes
PRODUCT RATE
Rate distribution of the reclassification
TAX RATE BROWSE SCREEN
To access the Tax Rate Browse screen, choose Tax Rate Browse from the TXAS Main Menu. Type “1” in the RATE TYPE field and press Enter
to view a list of reclassified items. The following information will be displayed:
FIELD
DESCRIPTION
CUSIP
CUSIP reclassified
FROM DATE
Effective date of the reclassification
RUN DATE
Date the reclassification was entered into the TXAS system
PRODUCT FROM
Original classification
TYPE TO
Components of the reclassifications, which may contain up to three product codes
PRODUCT RATE
Rate distribution of the reclassification
Type “I” in the S field and press Enter to access the Reclassification Rate Inquiry screen.
PRINT REQUEST ADD SCREEN
To access the Print Request Add screen, choose Print Request Add from the TXAS Main Menu, the Tax Statement Reprint—Add page
displays. To request a duplicate copy of the Tax Information Statement, type the account number in the ACCOUNT field, then type the
following information in the corresponding fields:
FIELD
TYPE
INDICATES
MEDIA
P
Your request will print on paper
SORT
A
Your request will be sorted in ascending order
DUP/REVISE
D
You will receive a duplicate reprint
PRINT
Y
Your request will print in the next print cycle
PRINT REQUEST BROWSE SCREEN
To access the Print Request Browse screen, choose Print Request Browse from the TXAS Main Menu, Type “3” in the REPRINT TYPE field and
the account number or IBD number (followed by six zeros) in the BROWSE KEY FIELD, and press Enter.
HOLD TAX STATEMENT PRINT
To access the Hold Tax Statement Print Screen, choose Print Request Add from the TXAS Main Menu. To request a Hold of the Tax
Information Statement due to incomplete cost basis information until the following production schedule, type the account number in the
Account field, then type the following information in the corresponding fields:
FIELD
MEDIA
TYPE
INDICATES
P
Your request will print on paper
SORT
A
Your request will be sorted in ascending order
DUP/REVISE
H
The Tax Statement print will be placed on hold.
PRINT
Y
Your request will print in the next print cycle
Please note: In order to request a deletion of a pending Tax Statement Print Hold, please submit your request via Service Center using the
following path: Other Products/Misc > Tax Reporting > Tax Information Statement.
TAX REPORT INQUIRY SCREEN
To access the Tax Report Inquiry screen, choose Tax Report Inquiry from the TXAS Main Menu. When you first access your clients’ accounts,
the first page of the statement (shown on the following page) is displayed. Use the function keys to scroll through the statement. To view the
Supplemental Capital Gain Distribution Information, type “330” in the PROD field, and press Enter.
Please note: FOR INTERNAL USE ONLY is noted at the top of all screens as a reminder to use them for reference only (printouts should not
be sent to clients).
54
Nonretirement Product Tax Information
txas—tax reporting sYsteM/teFra
**** FOR INTERNAL USE ONLY ****
TAX INFORMATION REPORT
FOR THE PERIOD BEGINNING 01/01/XX (current tax year) AND ENDING 12/31/XX (current tax year)
ACCOUNT NUMBER: 511-1234546
TAXPAYER IDENTIFICATION
NUMBER: 123-45-6789
LAST REVISION DATE: 10/22/XX
JOHN SMITH
123 MAIN STREET
BROOKLYN NY 11215-0190
SUMMARY TOTALS:
GROSS PROCEEDS (LESS COMMISSIONS AND OPTION PREMIUMS)
92,241.90
FEDERAL INCOME TAX WITHHELD (GROSS PROCEEDS)
6,046.36
PROFIT OR (LOSS) REALIZED IN 20 XX (current tax year)141.12
UNREALIZED PROFIT OR (LOSS) ON OPEN CONTRACTS – 12/31/XX (previous tax year)(421.38)
UNREALIZED PROFIT OR (LOSS) ON OPEN CONTRACTS – 12/31/XX (current tax year)1,000.00
AGGREGATE PROFIT OR (LOSS) JANUARY 1–DECEMBER 31, 20 XX (current tax year)1,562.50
INTEREST INCOME (PRODUCT CODES 210 THROUGH 240)
8,417.50
INTEREST ON U.S. SAVINGS BOND AND TREASURY OBLIGATIONS
1,591.72
ORDINARY DIVIDENDS
500.00
QUALIFIED DIVIDENDS
100.00
CAPITAL GAIN DISTRIBUTIONS
200.00
NONTAXABLE DISTRIBUTIONS
100.00
FOREIGN TAX PAID (DIVIDENDS AND DISTRIBUTIONS)
15.00
LIQUIDATION DISTRIBUTIONS CASH 733.00
TOTAL ORIGINAL ISSUE DISCOUNT FOR 20XX (current tax year)402.06
ORIGINAL ISSUE DISCOUNT FOR 20XX (NON-U.S. TREASURY OBLIGATIONS) (current tax year)20.30
ORIGINAL ISSUE DISCOUNT (U.S. TREASURY OBLIGATIONS)
381.76
OTHER PERIODIC INTEREST
750.00
SUBSTITUTE PAYMENTS IN LIEU OF DIVIDENDS OR INTEREST
50.00
RENTS200.00
Royalties 100.00
Other Income500.00
Tax-Exempt Specified Private ACTIVITY Bond Interest400.00
Tax-Exempt Interest1,000.00
MUNICIPAL ORIGINAL ISSUE DISCOUNT – SUBJECT TO AMT
21.98
MUNICIPAL ORIGINAL ISSUE DISCOUNT – NOT SUBJECT TO AMT
145.64
PARTNERSHIP CASH DISTRIBUTIONS
200.00
INVESTMENT EXPENSES, ADVISORY FEES AND SHORTFALLS
200.00
RETURN OF PRINCIPAL DISTRIBUTIONS AND NONQUALIFIED STATED INTEREST
243.37
EQUITY OPTION PROCEEDS AND EXPIRATIONS
6,188.29
NET COST OF SECURITIES PURCHASED
206,346.98
ACCRUED INTEREST PURCHASED – U.S. CORPORATIONS
280.75
ACCRUED INTEREST PURCHASED – U.S. GOVERNMENT AGENCIES
75.71
ACCRUED INTEREST PURCHASED – FOREIGN SOURCES
250.00
ACCRUED INTEREST PURCHASED – U.S. GOVERNMENT
464.67
Tax-Exempt Specified Private ACTIVITY Bond Interest
270.49
Tax-Exempt Interest105.56
PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
TRADE/PROCESS
DESCRIPTION
ALCIDE CORP NEW
SHORT SALE
CUSIP
123456789
DATE
QUANTITY
06/05/20XX1,750.00
**ADDED**
**UPDATED** 09/04/20 XX500
55
PROCEEDS
5,200.00
FEDERAL TAX
Nonretirement Product Tax Information
txas—tax reporting sYsteM/teFra
PRODUCT/CUSIP BROWSE SCREEN
ADVISORY FEES SCREEN
To access the Product/CUSIP Browse screen and view a list of
transactions by product type, CUSIP or both, choose Product/CUSIP
Browse from the TXAS Main Menu. To view these items on the Tax
Information Statement, type “S” in the S field, and press Enter.
To access the Advisory Fees Screen, choose Advisory Fees from the
TXAS Main Menu. Enrollment can be done in three modes—for the
entire IBD (IBD mode), for a given office in an IBD (Office mode) or
for a given Office/IP combination (Office-IP mode). When any of the
enrollment types are entered, press Enter and it will show the Browse
ACTIVITY LOG BROWSE SCREEN
Field and Add New Enrollment Fields. Based on the enrollment
To access the Activity Log Screen, choose Activity Log Browse from
type selected, the user can add new IBD/OFFICE/OFFICE-IP to the
the TXAS Main Menu. To view statement revisions, enter the account
advisory file. When the user enters new IBD (for example 123) in the
number or IBD number in the ACCOUNT field and press Enter. To
Add New Enrollment field and presses Enter, it will prompt the user
further refine your search, type the IP’s number in the IP field, the
to CONFIRM ACTION (Y OR N).
activity date in the ACTIVITY DATE field or the CUSIP in the CUSIP
field, and press Enter. To view any information that changed on a
PRODUCT CODES
statement, type “S” in the SEL field, and press Enter.
There are both general and specific product codes. Type the general
product code (for instance, 200, 300, 400) in the PRODUCT TYPE
PUERTO RICO INQUIRY SCREEN
field of an applicable TXAS screen to view related tax information,
To access the Puerto Rico Inquiry Screen, choose Puerto Rico Inquiry
and press Enter. Type a specific product code (for instance, 230, 240,
from the TXAS Main Menu. When you first access your clients’
250) in the PRODUCT TYPE field to view tax information related to a
accounts, the first page of the statement is displayed. Use the
particular reportable or nonreportable income item, and press Enter.
function keys to scroll through the statement.
Please note: Typing a general product code (200) allows you to view
the specific product codes (210, 220, 230, 240 and 250) without
retyping each product code.
Refer to the following tables for a list of product codes for reportable and nonreportable income.
REPORTABLE INCOME
PRODUCT CODE
Gross proceeds—1099-B
100
Gross proceeds (less commissions and option premiums)
110
Unrealized profit or loss on open contracts—20XX (previous tax year)
120
Profit or loss realized—20XX (current tax year)
130
Unrealized profit or loss on open contracts—20XX (current tax year)
140
Interest—1099-INT
200
Interest income (U.S. corporations and other)
210
Interest income (U.S. government agencies)
220
Interest income (foreign source)
230
Interest income (credit interest)
240
Government interest income
250
Dividends—1099-DIV
300
Ordinary dividends (U.S. corporations)
310
Qualified dividends (U.S. corporations)
315
Ordinary dividends (foreign corporations)
320
Qualified dividends (foreign corporations)
325
Capital gain distributions
330
Nontaxable distributions
340
Liquidation distributions
350
Specified Private Activity Bond Interest Dividend
360
Exempt Dividend Interest
365
Original issue discount—1099-OID
400
Original issue discount (non-U.S. Treasury obligations)
410
Original issue discount (U.S. Treasury obligations)
420
56
Nonretirement Product Tax Information
txas—tax reporting sYsteM/teFra
REPORTABLE INCOME
PRODUCT CODE
Other periodic interest
430
Substitute payments in lieu of dividends or interest—1099-MISC
490
Rents
496
Royalties—1099-MISC
492
Other income—1099-MISC
494
Tax-exempt interest income
500
Tax-exempt specified private bond interest
510
Tax-exempt interest
515
NONREPORTABLE INCOME
PRODUCT CODE
Municipal original issue discount (not subject to AMT)
522
Partnership cash distributions
525
Return of principal distributions and nonqualified stated interest
530
Advisory Fees and Shortfalls
535
Equity option transactions
540
Accrued interest purchased
600
Accrued interest purchased (U.S. corporations)
610
Accrued interest purchased (U.S. government agencies)
615
Accrued interest purchased (foreign source)
620
Accrued interest purchased (U.S. government bonds and notes)
625
Accrued interest purchased (tax-exempt-specified private bond interest)
630
Accrued interest purchased (tax-exempt interest)
635
Margin interest expense
690
Securities purchased and accrued interest purchased
700
Securities purchased
710
CDOs/REMICs
800
CDOs/REMICs (description only)
810
CDOs/REMICs
820R
WHFITs
820W
Royalty trusts
820RT
ADDITIONAL INFORMATION
If you have any questions about TXAS, please call Pershing’s Tax Reporting Help Desk at (800) 699-9965 or (201) 413-4200 for calls
originating outside of the United States.
Please note: Pershing is not authorized to offer tax advice.
57
retirement Product Tax Information
what’s new for 2013 retirement products
>TRUNCATING IDENTIFICATION NUMBERS ON PAPER
PAYEE STATEMENTS
>COST-OF-LIVING ADJUSTMENTS FOR
RETIREMENT ACCOUNTS
The IRS has extended the program that allows filers of Forms
1099-R, 1099-Q, 5498 and 5498-ESA to truncate a recipient’s
(Forms 1099-R and 1099-Q), participant’s (Form 5498) or
beneficiary’s (Form 5498-ESA) identification number (SSN, ITIN or
Adoption Taxpayer’s Identification Number or ATIN) on the paper
payee statement for tax year 2013. Pershing will be truncating
identification numbers for 2013 reporting for the noted forms.
The Internal Revenue Code provides for dollar limitations on
contributions to IRAs and requires the limits to be adjusted
annually for cost-of-living increases.
Filing Status
Please note: The IRS does not allow for the truncation of EINs.
EINs will be displayed in their entirety on Forms 1099-R, 1099-Q,
5498 and 5498-ESA.
Married filing
jointly or qualifying
widow(er)
Married filing
separately (and lived
with spouse at any
time during the year)
Single, head of
household or
married filing
separately (and did
not live with spouse
at any time during
the year)
2014 Modified
AGI
2013 Modified
AGI
2013 Contribution
Limits
Less than
$181,000
Less than
$178,000
$5,500 ($6,500 if
50 and older)
At least
$181,000
but less than
$191,000
At least
$178,000
but less than
$188,000
0 to $5,500
(0 to $6,500 if
50 or older)
$191,000 or
more
$188,000 or
more
Not eligible to
contribute
zero (-0-)
zero (-0-)
$5,500 ($6,500 if
50 and older)
More than zero
(-0-) but less
than $10,000
More than zero
(-0-) but less
than $10,000
0 to $5,500
(0 to $6,500 if
50 or older)
$10,000 or
more
$10,000 or
more
Not eligible to
contribute
Less than
$114,000
Less than
$112,000
$5,500 ($6,500 if
50 and older)
At least
$114,000
but less than
$129,000
At least
$112,000
but less than
$127,000
0 to $5,500
(0 to $6,500 if
50 or older)
$129,000 or
more
$127,000 or
more
Not eligible to
contribute
Please note: This information is provided by the IRS and is
available at irs.gov.
– For 2014, the annual participant contribution limit for those
under the age of 50 is the lesser of $5,500 or the amount of
taxable income for the year.
– The annual participant contribution limit for those 50 and
older is the lesser of $6,500 or the amount of taxable
income for the year.
For more information, go to irs.gov and search
“Effect of Modified AGI.”
Please note: The following contribution limit increased from
2013 to 2014:
Annual Contribution Limits
2014
2013
Elective Salary Deferral
$17,500
$17,500
Defined Contribution Plans
$52,000
$51,000
For more information, go to irs.gov and search “COLA Increases.”
58
retirement Product Tax Information
General Information
>Payer
>Coverdell ESA Reporting
Pershing LLC is the payer of income reported on IRS Forms 1099-R
and 1099-Q for those custodians participating in the Combined
Federal and State Filing program.
Coverdell ESA contributions will be reported on IRS Form 5498ESA, Coverdell ESA Contribution Information. Coverdell ESA
distributions will be reported on IRS Form 1099-Q, Payments from
Qualified Education Programs (under Sections 529 and 530).
>Payer’s TIN
Direct transfers into a Coverdell ESA will be reported in Box 2
(Rollover Contributions) of IRS Form 5498-ESA. The transfer
amounts will be included with any rollover contributions. Direct
transfers have historically been nonreportable. As a result, the
amount reported in Box 2 may be different than the rollover
contribution amount reported on the account statement or in IRAs.
Pershing’s TIN for 1099-R and 1099-Q reporting is 13-3718556.
Pershing’s TIN for 5498 and 5498-ESA reporting is 13-2741729.
Please note: For 5498 and 5498-ESA reporting, if your client has
a custodian other than Pershing, that custodian’s TIN will be used
for reporting.
>Minimum Distribution Amounts
In accordance with regulatory requirements, Pershing will issue
an IRS Form 1099-R to report all distributions of $10 or more from
IRAs, qualified retirement plans and 403(b)(7) custodial accounts
to the IRS and your clients.
>New Clients
The tax forms will include tax reporting activity for the 2013
tax year. If your firm joined Pershing after January 1, 2013, your
clients may receive tax forms from Pershing and the previous
payer. Questions regarding tax forms should be directed to the
appropriate payer.
IRS Form 5498-ESA will be mailed to clients by May 31, 2014,
instead of April 30, as a result of Pershing filing for an extension
with the IRS. The additional time is needed to accommodate
contributions for 2013 that can be made as late as April 15, 2014.
>DISPLAY OF FAIR MARKET VALUE INFORMATION ON
RETIREMENT ACCOUNT STATEMENTS
The IRS requires filers of Form 5498, to provide the December 31,
2013, IRA Fair Market Value to participants by January 31, 2014.
This information is reported to the IRS as part of Form 5498 filing,
which has a deadline of May 31 following the tax year with the
IRS. Enhanced descriptions relating to fair market value fields
were implemented in the Client Service Information section of
December 2013 retirement account statements for clients who
hold IRAs for which Pershing functions as either the custodian or
servicing agent.
>Qualified Retirement Plan
Qualified retirement plan omnibus accounts pool assets for
multiple employees of the same employer. Generally, these
accounts bear the name and TIN of the employer. Pershing does
not issue IRS Form 1099-R to participants for distributions that
occur from omnibus accounts. Instead, these forms are issued by
the plan trustee(s).
For 2013, we provided the fair market value, as of December 31, 2013,
as part of the December statement. December 2013 is a quarter-end
statement and will be sent to all open retirement accounts, regardless
of activity.
>fair market value
IRA owners will receive their December 31, 2013, fair market value
report as part of their December 2013 account statement.
>Retirement PRODUCT information
You can research your clients’ tax-related inquiries by using our
IRA System (IRAS). IRAS provides online viewing of reportable and
certain nonreportable transactions, at both summary and detail
levels, in retirement accounts for which Pershing LLC acts as
custodian or servicing agent.
>E-Document Suite
Copies of original and corrected IRS Forms 1099-R, 1099-Q,
5498, and 5498-ESA are available in e-Document Suite
via NetX360.
59
retirement Product Tax Information
General Information
>Whom To Contact
Please contact the Pershing Credit Services Client Service Group at
(888) 367-2563 or your tax professional with questions about tax
reporting issues related to retirement products. A list of frequently
asked questions is available on pages 79 and 80.
>STATE REPORTING AND WITHHOLDING
For information regarding Pershing’s state tax withholding program,
enter keyword “Tax Grid” in Marketing Center in NetX360. Pershing
offers state reporting and withholding for 41 states.
>TAX INFORMATION STATEMENT CD-ROMS MAILED
Please note: Pershing is not permitted to offer tax advice.
All Tax Information Statements are available in e-Document Suite
via NetX360. Additionally, Pershing will be providing copies of the
Tax Information Statements via CD-ROM if your firm has at least
10 tax forms for 2013 for a form type.
>E-Delivery OF ELIGIBLE TAX FORMS
Pershing offers e-delivery of the following forms: 1099-R, 1099-Q,
5498 and 5498-ESA. Your clients can enroll to receive these tax
statements electronically as opposed to receiving a paper copy
of the form. Clients must actively self-enroll in e-delivery of tax
forms and that election remains in effect until it is changed or
revoked. When tax forms are available, your client will receive an
e-mail with a link to access their document(s). Electronic delivery
is available for tax year 2010 and forward for eligible forms. If
your clients receive the noted forms electronically their SSN, ITIN
or ATIN will not be truncated. The IRS does not allow for the
truncation of these tax identification numbers when these forms
are delivered electronically.
Please note: 1099-R and 1099-Q are included on one CD. If the
combined total for your firm is 10 or more for 2013, a CD will be sent
to you. The same process is followed for 5498 and 5498-ESA. See
page 44 regarding information for ordering additional or replacement
copies of CDs for prior years. See the Schedule A regarding costs
associated for ordering additional CDs. Schedule A reflects the cost
for CDs for the prior year (for example, CDs for 2013, 1099 CDs
ordered in 2014). If CDs are needed for earlier years, there may be
additional costs involved as charged by our CD vendor.
60
retirement Product Tax Information
Sample STATEMENT
IRS Form 1099-R Copy b and copy 2
Please note: For corrected forms, “Corrected as of MM/DD/YYYY” will be displayed in the upper-right corner of the form, directly below
“2013 Retirement Account Tax Information Statement.” The date will be the day the process was run to generate the corrected form.
The following additional note will appear at the bottom of the note section: “This form contains revised information to correct reporting
previously provided for your account for tax year 2013.”
Sample instructions
Instructions for Recipient
Generally, distributions from pensions, annuities, profit-sharing and retirement plans (including
section 457 state and local government plans), IRAs, insurance contracts, etc., are reported to
recipients on Form 1099-R.
Qualified plans. If your annuity starting date is after 1997, you must use the simplified method to
figure your taxable amount if your payer did not show the taxable amount in box 2a. See the
Instructions for Form 1040 or 1040A.
IRAs. For distributions from a traditional individual retirement arrangement (IRA), simplified employee
pension (SEP), or savings incentive match plan for employees (SIMPLE), generally the payer is not
required to compute the taxable amount. See the Form 1040 or 1040A instructions to determine the
taxable amount. If you are at least age 70½, you must take minimum distributions from your IRA
(other than a Roth IRA). If you do not, you may be subject to a 50% excise tax on the amount that
should have been distributed. See Pub. 590 for more information on IRAs.
Roth IRAs. For distributions from a Roth IRA, generally the payer is not required to compute the
taxable amount. You must compute any taxable amount on Form 8606. An amount shown in box 2a
may be taxable earnings on an excess contribution.
Loans treated as distributions. If you borrow money from a qualified plan, section 403(b) plan, or
governmental section 457(b) plan, you may have to treat the loan as a distribution and include all or
part of the amount borrowed in your income. There are exceptions to this rule. If your loan is
taxable, Code L will be shown in box 7. See Pub. 575.
Recipient’s identification number. For your protection, this form may show only the last four digits
of your social security number (SSN), individual taxpayer identification number (ITIN), or adoption
taxpayer identification number (ATIN). However, the issuer has reported your complete identification
number to the IRS, and, where applicable, the state and /or local governments.
Account number. May show an account or other unique number the payer assigned to distinguish
your account.
Box 1. Shows the total amount you received this year. The amount may have been a direct rollover, a
transfer or conversion to a Roth IRA, a recharacterized IRA contribution; or you may have received it
as periodic payments, as nonperiodic payments, or as a total distribution. Report the amount on
Form 1040 or 1040A on the line for "IRA distributions" or "Pensions and annuities" (or the line for
"Taxable amount"), and on Form 8606, as applicable. However, if this is a lump-sum distribution,
see Form 4972. If you have not reached minimum retirement age, report your disability payments on
the line for "Wages, salaries, tips, etc." on your tax return. Also report on that line permissible
withdrawals from eligible automatic contribution arrangements and corrective distributions of excess
deferrals, excess contributions, or excess aggregate contributions except if you are self-employed. If
a life insurance, annuity, qualified long-term care, or endowment contract was transferred tax free to
another trustee or contract issuer, an amount will be shown in this box and Code 6 will be shown in
box 7. If a charge or payment was made against the cash value of an annuity contract or the cash
surrender value of a life insurance contract for the purchase of qualified long-term care insurance,
an amount will be shown in this box and Code W will be shown in box 7. You need not report these
amounts on your tax return.
Box 2a. This part of the distribution is generally taxable. If there is no entry in this box, the payer may
not have all the facts needed to figure the taxable amount. In that case, the first box in box 2b
should be checked. You may want to get one of the free publications from the IRS to help you figure
the taxable amount. See Additional information on the back of Copy 2. For an IRA distribution, see
IRAs and Roth IRAs above. For a direct rollover, other than from a qualified plan to a Roth IRA, zero
should be shown, and you must enter zero (-0-) on the "Taxable amount" line of your tax return. If
this is a total distribution from a qualified plan and you were born before January 2, 1936 (or you are
the beneficiary of someone born before January 2, 1936), you may be eligible for the 10-year tax
option. See the Form 4972 instructions for more information. If you are an eligible retired public
safety officer who elected to exclude from income distributions from your eligible plan used to pay
certain insurance premiums, the amount shown in box 2a has not been reduced by the exclusion
amount. See instructions for Form 1040 or Form 104A for more information.
Box 2b. If the first box is checked, the payer was unable to determine the taxable amount, and box
2a should be blank, except for an IRA. It is your responsibility to determine the taxable amount. If
the second box is checked, the distribution was a total distribution that closed out your account.
Box 3. If you received a lump-sum distribution from a qualified plan and were born before January 2,
1936 (or you are the beneficiary of someone born before January 2,1936), you may be able to elect
to treat this amount as a capital gain on Form 4972 (not on Schedule D (Form 1040)). See the Form
4972 instructions. For a charitable gift annuity, report as a long-term capital gain as explained in the
instructions for Form 8949.
Box 4. Shows federal income tax withheld. Include this amount on your income tax return as tax
withheld, and if box 4 shows an amount (other than zero), attach Copy B to your return. Generally, if
you will receive payments next year that are not eligible rollover distributions, you can change your
withholding or elect not to have income tax withheld by giving the payer Form W-4P.
61
Box 5. Generally, this shows the employee's investment in the contract (after-tax contributions), if
any, recovered tax free this year; the portion that is your basis in a designated Roth account; the
part of premiums paid on commercial annuities or insurance contracts recovered tax free; or the
nontaxable part of a charitable gift annuity. This box does not show any IRA contributions. If the
amount shown is your basis in a designated Roth account, the year you first made contributions
to that account may be entered in the box next to box 11.
Box 6. If you received a lump-sum distribution from a qualified plan that includes securities of the
employer's company, the net unrealized appreciation (NUA) (any increase in value of such
securities while in the trust) is taxed only when you sell the securities unless you choose to
include it in your gross income this year. See Pub. 575 and the Form 4972 instructions. If you
did not receive a lump-sum distribution, the amount shown is the NUA attributable to employee
contributions, which is not taxed until you sell the securities.
Box 7. The following codes identify the distribution you received. For more information on these
distributions, see the instructions for your tax return. Also, certain distributions may be subject to
an additional 10% tax. See instructions for Forms 5329.
1-Early distribution, no known exception (in most cases, under age 59 ½).
2-Early distribution, exception applies (under age 59 ½).
3-Disability.
4-Death.
5-Prohibited transaction.
6-Section 1035 exchange (a tax-free exchange of life insurance, annuity, qualified long-term
care insurance, or endowment contracts).
7-Normal distribution.
8-Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2013.
9-Cost of current life insurance protection.
A-May be eligible for 10-year tax option (see Form 4972).
B-Designated Roth account distribution. Note: If Code B is in box 7 and an amount is reported
in box 10, see the instructions for Forms 5329.
D-Annuity payments from nonqualified annuities that may be subject to tax under section 1411.
E-Distributions under Employee Plans Compliance Resolution System (EPCRS).
F-Charitable gift annuity.
G-Direct rollover of a distribution (other than a designated Roth account distribution) to a
qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA.
H- Direct rollover of a designated Roth account distribution to a Roth IRA.
J-Early distribution from a Roth IRA, no known exception (in most cases, under age 59 ½).
L-Loans treated as distributions.
N-Recharacterized IRA contribution made for 2013 and recharacterized in 2013.
P-Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2012.
Q-Qualified distribution from a Roth IRA.
R-Recharacterized IRA contribution made for 2012 and recharacterized in 2013.
S-Early distribution from a SIMPLE IRA in first 2 years, no known exception (under age 59 ½).
T-Roth IRA distribution, exception applies.
U-Dividend distribution from ESOP under sec. 404(k). Note. This distribution is not eligible for
rollover.
W-Charges or payments for purchasing qualified long-term care insurance contracts under
combined arrangements.
If the IRA/SEP/SIMPLE box is checked, you have received a traditional IRA, SEP, or SIMPLE
distribution.
Box 8. If you received an annuity contract as part of a distribution, the value of the contract is
shown. It is not taxable when you receive it and should not be included in boxes 1 and 2a.
When you receive periodic payments from the annuity contract, they are taxable at that time. If
the distribution is made to more than one person, the percentage of the annuity contract
distributed to you is also shown. You will need this information if you use the 10-year tax option
(Form 4972). If charges were made for qualified long-term care insurance contracts under
combined arrangements, the amount of the reduction in the investment (but not below zero) in
the annuity or life insurance contract is reported here.
Box 9a. If a total distribution was made to more than one person, the percentage you received is
shown.
Box 9b. For a life annuity from a qualified plan or from a section 403(b) plan (with after-tax
contributions), an amount may be shown for the employee's total investment in the contract. It is
used to compute the taxable part of the distribution. See Pub 575.
Box 10. If an amount
is reported in this box, see the instructions for Forms 5329 and Pub 575.
st
Box 11. The 1 year you made a contribution to the designated Roth account reported on this
form is shown in this box.
Boxes 12-17. If state or local income tax was withheld from the distribution, boxes 14 and 17 may
show the part of the distribution subject to state and/or local tax.
retirement Product Tax Information
Sample STATEMENT
IRS Form 1099-R Copy b and copy 2
Sample STATEMENT
Please note: Copy B is only included if federal income taxes were withheld from the distribution.
Please note: Copy 2 is only included if state taxes were withheld from the distribution.
62
Enter the first year of the 5-taxable-year period. This is the
year in which the designated Roth account was first
established by the recipient.
Boxes 12–17. State and local information
These boxes and Copies 1 and 2 are provided for your
convenience only and need not be completed for the IRS.
Use the state and local information boxes to report
distributions and taxes for up to two states or localities.
Guide to IRS form 1099-R Distribution Codes
name of the state and the payer's state identification
number. The state number is the payer's identification
number assignedretirement
by the individual Product
state. In box 16,
enter
Tax
Information
the name of the locality. In boxes 14 and 17, you may
enter the amount of the state or local distribution. Copy 1
may be used to provide information to the state or local
tax department. Copy 2 may be used as the recipient's
copy in filing a state or local income tax return.
Guide to Distribution Codes
Distribution Codes
1—Early distribution, no known exception.
2—Early distribution, exception applies.
*Used with code ...(if
applicable)
Explanations
Use Code 1 only if the employee/taxpayer has not reached age 591 2,
and you do not know if any of the exceptions under Code 2, 3, or 4
apply. Use Code 1 even if the distribution is made for medical
expenses, health insurance premiums, qualified higher education
expenses, a first-time home purchase, or a qualified reservist
distribution under section 72(t)(2)(B), (D), (E), (F), or (G). Code 1 must
also be used even if a taxpayer is 591 2 or older and he or she modifies
a series of substantially equal periodic payments under section 72(q),
(t), or (v) prior to the end of the 5-year period which began with the first
payment.
Use Code 2 only if the employee/taxpayer has not reached age 591 2
and you know the distribution is:
8, B, D, L, or P
8, B, D, or P
A Roth IRA conversion (an IRA converted to a Roth IRA).
A distribution made from a qualified retirement plan or IRA because
of an IRS levy under section 6331.
A section 457(b) plan distribution that is not subject to the
additional 10% tax. But see Section 457(b) plan distributions, earlier,
for information on distributions that may be subject to the 10%
additional tax.
A distribution from a qualified retirement plan after separation from
service in or after the year the taxpayer has reached age 55.
A distribution from a governmental defined benefit plan to a public
safety employee after separation from service in or after the year the
employee has reached age 50.
Page 16 of 23
A distribution that is part of a series of substantially equal periodic
payments as described in section 72(q), (t), (u), or (v).
Fileid: … 1099R&5498/2013/A/XML/Cycle11/source
A distribution that is a permissible withdrawal under an eligible
automatic contribution arrangement (EACA).
7:10 - 19-Nov-2013
The type and rule above prints on all proofs including
departmental
reproduction
proofs. MUST
be removed
Any other
distribution subject
to an exception
under section
72(q), before printing.
(t), (u), or (v) that is not required to be reported using Code 1, 3, or 4.
3—Disability.
For these purposes, see section 72(m)(7).
4—Death.
Use Code 4 regardless of the age of the employee/taxpayer to indicate 8, A, B, D, G, H, L, or P
payment to a decedent's beneficiary, including an estate or trust. Also
use it for death benefit payments made by an employer but not made
as part of a pension, profit-sharing, or retirement plan.
5—Prohibited transaction.
Use Code 5 if there was a prohibited transaction involving the account.
Guidethe
to Distribution
Code 5 means
account is no Codes
longer an IRA.
6—Section 1035 exchange.
Distribution Codes
D
None
*Used with code ...(if
Use Code 6 to indicate the tax-free exchange of life insurance, annuity, W
Explanations
long-term care insurance, or endowment contracts under section 1035. applicable)
Use Code 7: (a) for a normal distribution from a plan, including a
A , B, or D
traditional IRA, section 401(k), or section 403(b) plan, if the employee/
1
taxpayer is at least age 59 2, (b) for a Roth IRA conversion if the
participant is at least age 591 2, and (c) to report a distribution from a life
insurance, annuity, or endowment contract and for reporting income
from a failed life insurance contract under sections 7702(g) and (h).
See Rev. Proc. 2008-42, 2008-29 I.R.B. 160, available at www.irs.gov/
irb/2008-29_IRB/ar19.html. Generally, use Code 7 if no other code
applies. Do not use Code 7 for a Roth IRA.
Note: Code 1 must be0-15
used even if a taxpayer is 591 2 or older and he
Instructions for Forms 1099-R and 5498 (2013)
or she modifies a series of substantially equal periodic payments under
section 72(q), (t), or (v) prior to the end of the 5-year period which
began with the first payment.
7—Normal distribution.
8—Excess contributions plus earnings/
excess deferrals (and/or earnings) taxable
in 2013.
Use Code 8 for an IRA distribution under section 408(d)(4), unless
Code P applies. Also use this code for corrective distributions of
excess deferrals, excess contributions, and excess aggregate
contributions, unless Code P applies. See Corrective Distributions,
earlier, and IRA Revocation or Account Closure, earlier, for more
information.
9—Cost of current life insurance protection. Use Code 9 to report premiums paid by a trustee or custodian for
current life or other insurance protection. See the instructions for
box 2a, earlier, for more information.
1, 2, 4, B, or J
None
A—May be eligible for 10-year tax option.
Use Code A only for participants born before January 2, 1936, or their 4 or 7
beneficiaries to indicate the distribution may be eligible for the 10-year
tax option method of computing the tax on lump-sum distributions (on
Form 4972, Tax on Lump-Sum Distributions). To determine whether
the distribution may be eligible for the tax option, you need not consider
whether the recipient used this method (or capital gain treatment) in the
past.
B—Designated Roth account distribution.
Use Code B for a distribution from a designated Roth account. But use
1, 2, 4, 7, 8, G, L, P, or U
D—Annuity payments from nonqualified
annuities and distributions from life
insurance contracts that may be subject to
tax under section 1411.
Use Code D for a distribution from any plan or arrangement not
described in sections 401(a), 403(a), 403(b), 408, 408A, or 457(b).
1, 2, 3, 4, or 7
E—Distributions under Employee Plans
Compliance Resolution System (EPCRS).
See Distributions under Employee Plans Compliance Resolutions
63
System (EPCRS), earlier.
None
F—Charitable gift annuity.
See Charitable gift annuities, earlier.
None
Code E for
for a Forms
section 415
distribution
under
EPCRS
(see Code
E) or
Please note: This grid can be found in the 2013 Instructions
1099-R
and
5498,
which
is available
at irs.gov. See the IRS instructions
Code H for a direct rollover to a Roth IRA.
for further information and for page references noted in this grid: http://www.irs.gov/formspubs/index.html.
and 15, asand
appropriate.
In box 13, enter the abbreviated
in 2013.
excess deferrals, excess contributions,
excess aggregate
of the
state andDistributions,
the payer's state identification
contributions,
P applies.
See Corrective
Enter the first year of the 5-taxable-year period.
This unless
is theCode name
earlier,
or AccountThe
Closure,
for more
stateearlier,
number
is the payer's identification
year in which the designated Roth account
wasand
firstIRA Revocationnumber.
Product
Tax
information.
number assigned retirement
by the individual state.
In box 16,
enterInformation
established by the recipient.
the name
the locality.
In boxes
14 and
9—Cost of current life insurance protection. Use Code 9 to report premiums
paid byof
a trustee
or custodian
for
None17, you may
Boxes 12–17. State and local information
enter
the amount
the stateforor local distribution. Copy 1
current life or other insurance
protection.
See theof
instructions
box 2a,for
earlier,
for more information.
may be used to provide information to the state or local
These boxes and Copies 1 and 2 are provided
your
tax department.
Copy2,21936,
may or
betheir
used4as
convenience
only for
and
needtax
notoption.
be completed
for the
IRS.
A—May be eligible
10-year
Use Code
A only
for participants
born before January
or 7the recipient's
in filing
state
or for
local
Use the state and local information boxesbeneficiaries
to report to indicate thecopy
distribution
mayabe
eligible
the income
10-year tax return.
taxor
option
method of computing the tax on lump-sum distributions (on
distributions and taxes for up to two states
localities.
Guide to IRS form 1099-R Distribution Codes
Distribution Codes
Form 4972, Tax on Lump-Sum Distributions). To determine whether
Guide to Distribution Codes
the distribution may be eligible for the tax option, you need not consider
whether the recipient used this method (or capital gain treatment) in the *Used with code ...(if
Explanations
past.
applicable)
Use
for a ifdistribution
from a designated
Roth
account.
1,
2,
8, 2,
B, 4,
D,7,
L,8,
orG,
P L, P, or U
Use Code
Code B
1 only
the employee/taxpayer
has not
reached
ageBut
591use
Code E for a section 415 distribution under EPCRS (see Code E) or
and you do not know if any of the exceptions under Code 2, 3, or 4
Code H for a direct rollover to a Roth IRA.
apply. Use Code 1 even if the distribution is made for medical
expenses,
health
qualified
higher education
D—Annuity payments from nonqualified
Use
Code D
for a insurance
distributionpremiums,
from any plan
or arrangement
not
1, 2, 3, 4, or 7
expenses,in
a first-time
home purchase,
or a qualified
reservist
annuities and distributions from life
described
sections 401(a),
403(a), 403(b),
408, 408A,
or 457(b).
insurance contracts that may be subject to distribution under section 72(t)(2)(B), (D), (E), (F), or (G). Code 1 must
also be used even if a taxpayer is 591 2 or older and he or she modifies
tax under section 1411.
a series of substantially equal periodic payments under section 72(q),
E—Distributions under Employee Plans
See Distributions under Employee Plans Compliance Resolutions
None
(t), or (v) prior to the end of the 5-year period which began with the first
Compliance Resolution System (EPCRS).
System (EPCRS), earlier.
payment.
F—Charitable gift annuity.
See Charitable gift annuities, earlier.
None
2—Early distribution, exception applies.
8, B, D, or P
Use Code 2 only if the employee/taxpayer has not reached age 591 2
G—Direct rollover and rollover contribution. Use
Code
G
for
a
direct
rollover
from
a
qualified
plan,
section
403(b)
4
or B
and you know the distribution is:
Fileid: … 1099R&5498/2013/A/XML/Cycle11/source
plan or a governmental section 457(b) plan to an eligible retirement
A Roth IRA conversion (an IRA converted to a Roth IRA).
plan (another qualified plan, a section 403(b) plan, a governmental
A distribution
made
a qualified
retirement
planearlier.
or IRA Also
because
section
457(b)
plan,
or from
anreproduction
IRA).
See Direct
Rollovers,
use before printing.
The type and rule above prints on all proofs including
departmental
MUST
be removed
of an IRS
section
6331. to proofs.
Code
G forlevy
IRAunder
rollover
contributions
an accepting employer plan
A for
section
and
IRRs.457(b) plan distribution that is not subject to the
additional
10%
tax.
But see
plan
distributions,
earlier,
Note:
Do not
use
Code
G forSection
a direct457(b)
rollover
from
a designated
Roth
for information
on distributions
thatH.may be subject to the 10%
account
to a Roth
IRA. Use Code
additional tax.
H—Direct rollover of a designated Roth
Use Code H for a direct rollover of a distribution from a designated
4
A distribution from a qualified retirement plan after separation from
account distribution to a Roth IRA.
Roth account to a Roth IRA.
service in or after the year the taxpayer has reached age 55.
J—Early distribution from a Roth IRA.
Use
J for afrom
distribution
from a Roth
IRA when
Code T 8 or P
A Code
distribution
a governmental
defined
benefitCode
plan Q
to or
a public
does
apply. But
use
Code 2 for
an IRS
levyinand
Codethe
5 for
a the
safetynot
employee
after
separation
from
service
or after
year
Guide
to
Distribution
Codes
prohibited
transaction.
employee has
reached age 50.
B—Designated
Roth account
distribution.
1—Early distribution,
no known
exception.
Page 17 of 23
Distribution Codes
L—Loans treated as deemed distributions
under section 72(p).
N—Recharacterized IRA contribution made
for 2013.
3—Disability.
P—Excess
4—Death. contributions plus earnings/
excess deferrals taxable in 2012.
5—Prohibited transaction.
Q—Qualified distribution from a Roth IRA.
6—Section 1035 exchange.
7:10 - 19-Nov-2013
A distribution that is part of a series of substantially equal periodic
Explanations
payments as described in section 72(q), (t), (u), or (v).
distribution
a permissible
withdrawal
underTreated
an eligible
DoAnot
use Codethat
L toisreport
a loan offset.
See Loans
as
automatic contribution
Distributions,
earlier. arrangement (EACA).
Any
other
subject to anofexception
under section
72(q),
Use
Code
N distribution
for a recharacterization
an IRA contribution
made
for
(t), (u),
or (v)
that is not required
toto
beanother
reported
using
Code
2013
and
recharacterized
in 2013
type
of IRA
by1,
a 3, or 4.
trustee-to-trustee
transfer
or with72(m)(7).
the same trustee.
For these purposes,
see section
*Used with code ...(if
applicable)
1, 4, or B
None
D
See
explanation
for Code
The
suggests that anyone
using
1,
Use the
Code
4 regardless
of the 8.
age
of IRS
the employee/taxpayer
to indicate
8, 2,
A, 4,
B,B,
D,or
G,JH, L, or P
Code
P for
refund of an
IRA contribution
under
sectionor408(d)(4),
payment
tothe
a decedent's
beneficiary,
including
an estate
trust. Also
including
excess
Roth0-16
IRA
contributions,
payees,but
atfor
the
time
use it for death
benefit
payments
made byadvise
an employer
notForms
madethe1099-R and 5498 (2013)
Instructions
distribution
made, that
the earnings
taxableplan.
in the year in which
as part of a is
pension,
profit-sharing,
or are
retirement
the contributions were made.
Use Code 5 if there was a prohibited transaction involving the account. None
Use
Q forthe
a distribution
a Roth
None
CodeCode
5 means
account is from
no longer
anIRA
IRA.if you know that the
participant meets the 5-year holding period and:
Use Code 6 to indicate the tax-free exchange
of
life
insurance,
annuity,
W
The participant has reached age 591 2,
long-term care insurance, or endowment contracts under section 1035.
The participant died, or
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.
R—Recharacterized IRA contribution made
for 2012.
Use Code R for a recharacterization of an IRA contribution made for
2012 and recharacterized in 2013 to another type of IRA by a
trustee-to-trustee transfer or with the same trustee.
None
Use Code S only if the distribution is from a SIMPLE IRA in the first 2
None
years, the employee/taxpayer has not reached age 591 2, and none of
the exceptions under section 72(t) are known to apply when the
Instructions for Forms 1099-R and 5498 (2013)
0-15
distribution is made. The
2-year period begins on the day contributions
are first deposited in the individual's SIMPLE IRA. Do not use Code S if
Code 3 or 4 applies.
S—Early distribution from a SIMPLE IRA in
the first 2 years, no known exception.
T—Roth IRA distribution, exception applies. Use Code T for a distribution from a Roth IRA if you do not know if the
5-year holding period has been met but:
None
1
The participant has reached age 59 2,
The participant died, or
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.
U—Dividends distributed from an ESOP
under section 404(k).
Use Code U for a distribution of dividends from an employee stock
ownership plan (ESOP) under section 404(k). These are not eligible
rollover distributions. Note: Do not report dividends paid by the
corporation directly to plan participants or their beneficiaries. Continue
to report those dividends on Form 1099-DIV.
B
W—Charges or payments for purchasing
qualified long-term care insurance
contracts under combined arrangements.
Use Code W for charges or payments for purchasing qualified
long-term care insurance contracts under combined arrangements
which are excludible under section 72(e)(11) against the cash value of
an annuity contract or the cash surrender value of a life insurance
contract.
6
*See the first Caution for box 7 instructions, earlier.
Contributions.
You
must is
report
contributions
to any
IRAthe IRS instructions
Please note: This grid can be found in the 2013 Instructions for Forms 1099-R
and 5498,
which
available
at irs.gov.
See
Specific Instructions for Form 5498
on Form 5498. See the instructions under boxes 1, 2, 3, 4,
for further information
and
for
page
references
noted
in
this
grid:
http://www.irs.gov/formspubs/index.html.
File Form 5498, IRA Contribution Information, with the IRS
8, 9, 10, 13a, and 14a, later. If no reportable contributions
by June 2, 2014, for each person for whom in 2013 you
maintained any individual retirement arrangement (IRA),
including a deemed IRA under section 408(q).
An IRA includes all investments under one IRA plan. It
64
were made for 2013, complete only boxes 5 and 7, and
boxes 11, 12a, and 12b, if applicable.
You are required to file Form 5498 even if
required minimum distributions (RMDs) or other
retirement Product Tax Information
IRS Form 1099-Q
Sample STATEMENT
Please note: For corrected forms, “Corrected as of MM/DD/YYYY” will be displayed in the upper-right corner of the form, directly below
“2013 Education Account Tax Information Statement.” The date will be the day the process was run to generate the corrected form.
The following additional note will appear at the bottom of the note section: “This form contains revised information to correct reporting
previously provided for your account for tax year 2013.”
Instructions for Recipient
Sample instructions
Recipient’s identification number. For your protection, this form may show
only the last four digits of your social security number (SSN), individual
taxpayer identification number (ITIN), or adoption tax identification number
(ATIN).However, the issuer has reported your complete identification number
to the IRS and, where applicable, to state and/or local governments.
Account number. May show an account or other unique number the payer
has assigned to distinguish your account.
Box 1. Shows the gross distribution (including in-kind distributions) paid to
you this year from a qualified tuition program (QTP), under section 529, or a
Coverdell ESA (CESA), under section 530. This amount is the total of the
amounts shown in box 2 and box 3. See Pub. 970 for more information.
Caution: For CESA distributions (other than earnings on excess
contributions) made during 2013, the payer/trustee is not required to report
amounts in boxes 2 and 3. Instead, the payer/trustee may report the fair
market value of the CESA as of December 31, 2013, in the blank box below
boxes 5 and 6. To figure your earnings and basis, use the Coverdell ESA Taxable Distributions and Basis worksheet in Pub. 970.
Box 2. Shows the earnings part of the gross distribution shown in box 1.
Generally, amounts distributed are included in income unless they are used
to pay for qualified education expenses, transferred between trustees, or
rolled over to another qualified education program within 60 days. Report
taxable amounts as "Other Income" on Form 1040.
Under a QTP, the amount in box 2 is included in income if there has been (a)
more than one transfer or rollover within any 12-month period with respect to
the same beneficiary, or (b) a change in the designated beneficiary and the
new designated beneficiary is not a family member.
Under a CESA, the amount in box 2 is included in income if there has been a
change in the designated beneficiary and the new designated beneficiary is not a
family member or is over age 30 (except for beneficiaries with special needs).
Also, an additional 10% tax may apply to part or all of any amount included in
income from the CESA or QTP. See Form 5329 and your tax return instructions
for more information.
If a final (total) distribution is made from your account and you have not
recovered your contributions, see Pub. 970 to determine if you have a deductible
loss and how to claim it.
Box 3. Shows your basis in the gross distribution reported in box 1.
Box 4. This box is checked if a trustee-to-trustee transfer was made from one
QTP to another QTP, from one CESA to another CESA, or from a CESA to a
QTP. However, in certain transfers from a CESA, the box will be blank.
Box 5. Shows whether the gross distribution was from a QTP (private or state) or
from a CESA.
Box 6. The designated beneficiary is the individual named in the document
creating the trust or custodial account to receive the benefit of the funds in the
account.
Distribution codes. For 2013, the payer/trustee may, but is not required to,
report (in the box below boxes 5 and 6) one of the following codes to identify the
distribution you received: 1 - Distributions (including transfers); 2 - Excess
contributions plus earnings taxable in 2013; 3 - Excess contributions plus
earnings taxable in 2012; 4 - Disability; 5 - Death; 6 - Prohibited transaction.
Note: Nontaxable distributions from CESAs and QTPs, including rollovers, are
not required to be reported on your income tax return. See Pub. 970 for more
information.
65
retirement Product Tax Information
529 Plan Tax Information Reporting on IRS Form 1099-Q
A 529 plan is a qualified tuition program and account arrangement
that is described in Section 529 of the Internal Revenue Code. The
type of 529 plan accounts custodied by Pershing is a savings plan
where the account owner (participant) contributes for the benefit
of an eligible college bound individual (beneficiary). The plan and
account earnings generally accumulate tax free as long as the
contributions and earnings remain in the plan and are ultimately used
to pay qualifying educational expenses. Qualified plan and account
distributions generally are received free from federal income tax
and state income tax in certain states and may include expenses
for tuition, book, supplies, room and board at any accredited post
secondary educational institutions. 529 plans are offered by states
with varying rules dictated by state legislation and are typically,
but not always, administered by a single investment (mutual fund)
management company directly and offered by that investment
management company and/or by licensed securities brokers.
Sample STATEMENT
For 2013, Pershing is required to report distributions from 529 plans on
IRS Form 1099-Q (Payments From Qualified Education Programs ([Under
Sections 529 and 530]). The Form 1099-Q will be mailed to recipients
by January 31, 2014. Please refer to the image below to view the 2013
Form 1099-Q. Pershing expects to report the information included on
recipients’ copies of Form 1099-Q to the IRS by April 30, 2014.
1
3
For 2013, the Form 1099-Q will be issued under the applicable State
529 Plan’s Federal or EIN as the payer of the income. The Form 1099-Q
reports all distributions in their component parts, which includes the
amount of the Gross distribution (Box 1) and the portions of the Gross
distribution that consist of Earnings (Box 2) and Basis (Box 3)—see
below for a further explanation of the Form 1099-Q boxes. Losses or
negative earnings are only reported if the 529 plan account is closed
by December 31, 2013. If a 529 plan account has a loss or negative
earnings on a distribution made in 2013 but the account was not closed
by year-end 2013, zero earnings will be reported and the amounts of
basis and gross distribution reported will be equal to each other. If a
participant/beneficiary has accounts with multiple 529 plan providers
(other custoding firms or directly with the sponsoring state or fund),
all 529 plan accounts must be closed before any losses or negative
earnings may be reported. In this case, Pershing will continue to receive
the external basis and market value information from the master
aggregator for the 529 plan. This means there are still open accounts
for the participant/beneficiary. Therefore, Pershing will not report losses
or negative earnings.
4
2
5
6
Refer to the Sample Form above for detailed information on the sections.
1.The amount reported in Box 1 shows the Gross Distribution paid.
2.The amount reported in Box 2 shows the Gross Distribution less
any amount used to pay for qualified education expenses, transfers
to another trustee or rolled to another qualified education program
in 60 days.
3.The amount reported in Box 3 shows the basis in the Gross
Distribution paid in Box 1. The Basis is the total amount contributed
to the 529 plan. The amount reported in Box 3 will equal the
amount reported in Box 1 minus the amount reported in Box 2.
4.If Box 4 is checked, then a distribution has been made
directly from one Qualified Tuition Program to another
Qualified Tuition Program.
5.All 2013 Forms 1099-Q issued by Pershing will report the
State Qualified Tuition Program.
6.Box 6 will be checked if the recipient of the distribution is not the
designated beneficiary under the Qualified Tuition Program.
Please see IRS Publication 970 (Tax Benefits for Education) for
additional information.
66
retirement Product Tax Information
Correcting Tax Information for IRS Form 1099-R and IRS Form 1099-Q
1.Correction requests for IRS Form 1099-R and IRS Form 1099-Q can
be initiated in Service Center.
2.The steps to take to initiate a Service Center correction request
are:
Step 1—Select Category: Retirements Processing
Step 2—Select Request: 1099R/1099Q Correction
Step 3—Select the appropriate request type
3.Correction requests should include a copy of your client’s account
statement or NetX360 History screen printout with errors clearly
highlighted. If the correction involves an account name or TIN
change, enclose a copy of the executed Adoption Agreement after
the account has been updated.
4.Fax or send supporting documentation for correction requests to:
Pershing LLC
Attention: Retirement Products Department
One Pershing Plaza, 11th Floor
Jersey City, New Jersey 07399
Toll-Free Fax Number: (866) 355-5572
Direct Fax Number: (201) 333-8842 (for calls originating
outside of the United States)
Requests for corrections are reviewed upon receipt, and are approved
once we receive the necessary documentation. Correction requests
for forms 1099-R and 1099-Q should be submitted via Service Center,
accompanied by supporting documentation. A reject Service Center
notification will be sent within 48 hours after a correction request
has been received if the request is not in proper order. A corrected
IRS Form 1099-R or 1099-Q will be mailed to your client within five
business days after an adjustment is made to the account (generated
and mailed daily for 2013 corrections from February 10 to April 30 and
weekly from May 1), as appropriate. Corrected forms will be available
in e-Document Suite on the day the form is mailed to the account
holder or in Online Documents, as previously noted.
If you need help or have questions about forms 1099-R or 1099-Q tax
corrections, would like to obtain the status of a correction request or
if you are unable to locate or print a form, please contact Pershing’s
Credit Services Client Service team at (888) 367-2563 and select the
option for retirement accounts.
Sample screenshot
Or attach the supporting documents to your Service Center
request, as available.
5.Pershing provides for the correction of tax forms for the prior three
tax years. To obtain copies of the forms, go to Tax Documents in
e-Document Suite via NetX360. Enter the account number, tax
year and tax statement type to view the form. Pershing may need
to use the standard IRS form for certain corrections. If the standard
IRS form is used, you will be notified and a copy of the form for the
account will be available in Online Documents in NetX360.
67
retirement Product Tax Information
Sample STATEMENT
IRS Form 5498
Please note: For corrected forms, “Corrected as of MM/DD/YYYY” will be displayed in the upper-right corner of the form, directly below
“2013 Retirement Account Tax Information Statement.” The date will be the day the process was run to generate the corrected form.
The following additional note will appear at the bottom of the note section: “This form contains revised information to correct reporting
previously provided for your account for tax year 2013.”
Sample instructions
Instructions for Participant
The information on Form 5498 is submitted to the Internal Revenue Service by
the trustee or issuer of your individual retirement arrangement (IRA) to report
contributions, including any catch-up contributions, required minimum
distributions (RMDs), and the fair market value (FMV) of the account. For
information about IRAs, see Pubs. 590 and 560.
Box 5. Shows the FMV of all investments in your account at year end. However,
if a decedent’s name is shown, the amount reported may be the FMV on the
date of death. If the FMV shown is zero for a decedent, the executor or
administrator of the estate may request a date-of-death value from the financial
institution.
Account number. May show an account or other unique number the trustee
assigned to distinguish your account.
Box 6. Shows for endowment contracts only the amount allocable to the cost of
life insurance. Subtract this amount from your allowable IRA contribution
included in box 1 to compute your IRA deduction.
Box 1. Shows traditional IRA contributions for 2013 you made in 2013 and
through April 15, 2014. These contributions may be deductible on your Form
1040 or 1040A. However, if you or your spouse was an active participant in an
employer’s pension plan, these contributions may not be deductible. This box
does not include amounts in boxes 2–4, 8–10, 13a, and 14a.
Box 2. Shows any rollover, including a direct rollover to a traditional IRA or Roth
IRA, or a qualified rollover contribution (including a military death gratuity, SGLI
payment, or qualified settlement income) to a Roth IRA you made in 2013. It
does not show any amounts you converted from your traditional IRA, SEP IRA,
or SIMPLE IRA to a Roth IRA. They are shown in box 3. See the Form 1040 or
1040A instructions for information on how to report rollovers. If you have ever
made any nondeductible contributions to your traditional IRA or SEP IRA and
you did not roll over the total distribution, use Form 8606 to figure the taxable
amount. If property was rolled over, see Pub. 590. For a qualified rollover to a
Roth IRA, also see Pub. 590. For information on airline payments, see
www.irs.gov/form5498.
Box 3. Shows the amount converted from a traditional IRA, SEP IRA, or SIMPLE
IRA to a Roth IRA in 2013. Use Form 8606 to figure the taxable amount.
Box 4. Shows amounts recharacterized from transferring any part of the
contribution (plus earnings) from one type of IRA to another. See Pub. 590.
68
Box 7. May show the kind of IRA reported on this Form 5498.
Box 8. Shows SEP contributions made in 2013, including contributions made in
2013 for 2012, but not including contributions made in 2014 for 2013. If made
by your employer, do not deduct on your income tax return. If you made the
contributions as a self-employed person (or partner), they may be deductible.
See Pub. 560.
Box 9. Shows SIMPLE contributions made in 2013. If made by your employer,
do not deduct on your income tax return. If you made the contributions as a
self-employed person (or partner), they may be deductible. See Pub. 560.
Box 10. Shows Roth IRA contributions you made in 2013 and through April 15,
2014. Do not deduct on your income tax return.
Box 11. If the box is checked, you must take an RMD for 2014. An RMD may be
required even if the box is not checked. If you do not take the RMD for 2014,
you are subject to a 50% excise tax on the amount not distributed. See Pub.
590 for details.
retirement Product Tax Information
Sample STATEMENT
IRS Form 5498-ESA
Please note: For corrected forms, “Corrected as of MM/DD/YYYY” will be displayed in the upper-right corner of the form, directly below
“2013 Education Account Tax Information Statement.” The date will be the day the process was run to generate the corrected form.
The following additional note will appear at the bottom of the note section: “This form contains revised information to correct reporting
previously provided for your account for tax year 2013.”
Sample instructions
Instructions for Beneficiary
The information on Form 5498-ESA is furnished to you by
the trustee or issuer of your Coverdell education savings
account (ESA) by April 30, 2014. Form 5498-ESA reports
contributions and rollover contributions made for you for
2013. For more information about Coverdell ESAs, see
Pub. 970, Tax Benefits for Education.
If the total contributions made to all your Coverdell ESAs
for 2013 exceeded $2,000, you must withdraw the excess,
plus earnings, by June 2, 2014, or you may owe a penalty.
You must keep track of your Coverdell ESA basis
(contributions and distributions).
Beneficiary's identification number. For your protection,
this form may show only the last four digits of your social
security number (SSN), individual taxpayer identification
number (ITIN), or adoption taxpayer identification number
(ATIN). However, the issuer has reported your complete
identification number to the IRS and, where applicable, to
state and/or local governments.
Account number. May show an account or other unique
number the trustee/issuer assigned to distinguish your
account.
Box 1. Shows Coverdell ESA contributions made in 2013
and through April 15, 2014, on your behalf. Do not deduct
these amounts on your income tax return.
69
Box 2. Shows any rollover (including a direct rollover and
contribution of a military death gratuity) you made in 2013.
Generally, any amount rolled over from one Coverdell ESA
to another Coverdell ESA for the benefit of the named
beneficiary or a member of the beneficiary’s family who is
under age 30 (except for a beneficiary with special needs)
is not taxable.
Future developments. For the latest information about
developments related to Form 5498-ESA and its
instructions, such as legislation enacted after they were
published, go to www.irs.gov/form5498esa.
retirement Product Tax Information
Correcting Tax Information For IRS Form 5498 and IRS Form 5498-ESA
1.Correction requests for IRS Form 5498 and IRS Form 5498-ESA
can be initiated in Service Center via NetX360.
2.The steps to take to initiate a Service Center correction request are:
Step 1—Select Category: Retirements Processing
Step 2—Select Request: 5498/5498-ESA Correction
Step 3—Select the appropriate request type
3.Correction requests should include a copy of your client’s
account statement or NetX360 History screen printout with
errors clearly highlighted.
4.Fax or send supporting documentation for correction requests to:
Pershing LLC
Attention: Retirement Products Department
One Pershing Plaza, 11th Floor
Jersey City, New Jersey 07399
Toll-Free Fax Number: (866) 355-5572
Direct Fax Number: (201) 333-8842 (for calls originating
outside the United States)
Requests for corrections are reviewed upon receipt and are approved
once we receive the necessary documentation. Correction requests
for forms 5498 and 5498-ESA should be submitted via Service
Center, accompanied by supporting documentation. A rejected
Service Center notification will be sent within 48 hours after a
correction request has been received if the request is not in proper
order. A corrected IRS Form 5498 or 5498-ESA will be mailed to
your client within five business days after an adjustment is made
to the account (generated and mailed weekly for 2013 corrections
from June 9), as appropriate. Corrected forms will be available in
e-Document Suite on the day the form is mailed to the account
holder or in Online Documents, as previously noted.
If you need help or have questions about forms 5498 or 5498-ESA
tax corrections, would like to obtain the status of a correction request
or if you are unable to locate or print a form, please contact Pershing’s
Credit Services Client Service team at (888) 367-2563 and select the
option for retirement accounts.
Sample screenshot
Or attach the supporting documents to your Service Center
request, as available.
5.Pershing provides for the correction of tax forms for the prior three
tax years. To obtain copies of the forms, go to Tax Documents in
e-Document Suite via NetX360. Enter the account number, tax
year and tax statement type to view the form. Pershing may need
to use the standard IRS form for certain corrections. If the standard
IRS form is used, you will be notified and a copy of the form for the
account will be available in Online Documents in NetX360.
70
retirement Product Tax Information
IRS Form 1099-R Name/TIN Mismatch Notices
>IRS Notification
If a different name and TIN combination is provided on the
W9BN form, then there will be a mandatory 10% withholding
on previously established standing distribution instructions until
a new withholding election is received by Pershing. Pershing’s
withholding election is part of the Distribution Form, so the
account holder simply needs to complete and provide a new
distribution form to Pershing.
The IRS may notify Pershing when a name and TIN combination
on our 1099-Rs does not match the records of the Social Security
Administration or the IRS. This notification is typically received in
August or September each year and pertains to forms filed for the
tax year two years prior to the year of notification. For example, if a
notification was received in 2013, it would relate to 1099-R forms
for tax year 2011.
On the first business day after the deadline for receipt of the
W9BN, a First “B” Notice enforced date is placed on all accounts
involved in the mailing for which a W9BN is not returned. The
“B” Notice fields are used in Pershing’s system. Pershing follows
IRS Reasonable Cause procedures as outlined in IRS Publication
1586. The process is very similar to that required for “B” Notices.
While distributions from retirement plans are not subject to
backup withholding, the “B” Notices field is utilized to signify
and trigger the mandatory federal (and appropriate state) tax
withholding requirement for the account. The Pershing Automatic
Cash Exchange (PACE) system holds are placed on the accounts
as is the following notebook message, for example: IRS B NOTICE
DATE 2013-11-17 INCORRECT NAME/TIN MINIMUM 10% FED
TAX W/H REQD. If an account has a standing periodic distribution
instruction, Pershing will update the withholding election to at
least 10%, as required. Once updated, per IRS regulations, a new
instruction must be supplied to change the withholding election.
>W-9 Mailing
Pershing is required to solicit W-9 forms directly from the
appropriate account holder for the accounts identified in the
notification. Solicitations include a letter explaining the mismatch,
what actions the account owner should take, a pre-printed
substitute IRS Form W-9 (W9BN) and a return envelope. The First
“B” Notice Notification date field in Account Services is populated
with the W9BN mailing date. The substitute W9BN form must
be used to avoid mandatory withholding (not IRS Form W-9). If a
blank W9BN form is needed, it can be found in Marketing Center
in Resources via NetX360, key word: IRS B Notice.
The following report is made available in Report Center via
NetX360 prior to the client mailing: 1099-R Name and TIN
Mismatches for Tax Year 20XX (Report ID: IRA110R0) and a
communication is distributed to provide information regarding
the process.
If an account holder returns the W9BN after the “B” Notice has been
added to the account, then the “B” Notice-satisfied field will be
populated and the mandatory withholding requirement will be lifted
from the account. The PACE hold on the account will be removed and
the following notebook message will be added: W9BN RECEIVED
MIN W/H REQUIREMENT REMOVED.
>Mandatory Withholding Requirement
If the client does not respond to the TIN solicitation within the
prescribed time frame (45 calendar days from the mailing date),
Pershing is required to withhold a minimum of 10% federal
taxes (and applicable state taxes) from distributions. Per IRS
requirements in IRS Publication 1586, a new withholding election is
required at any point after the mailing date if the client furnishes a
different name and TIN combination.
foreign distribution tax treatment
>FOREIGN DISTRIBUTIONS: DEFINITION AND
BASIC CONDITIONS
3. If funds are distributed to a nonresident alien or foreign estate
and the account is documented with a W-8BEN, then
30% nonresident alien tax, or a reduced rate based upon
validly claimed treaty benefits, must be withheld from the
gross distribution amount.
A foreign distribution, for these purposes, is defined as taxable
amounts distributed from a retirement account that are disbursed
either outside of the United States or within the United States to
a nonresident alien. There are specific requirements regarding tax
treatment for foreign distributions.
>FOREIGN DISTRIBUTION TAX TREATMENT GRIDS
In order to provide a more specific understanding of how Pershing
will determine tax for foreign distributions, please refer to the two
grids on the next page.
There are three basic conditions:
1. If funds are distributed outside of the United States or its
possessions to a U.S. person, then a minimum of 10% federal tax
must be withheld from the gross distribution amount.
–Grid #1 details how Pershing handles documented accounts,
accounts with a valid IRS Form W-8BEN or IRS W-9 on file.
–
Grid #2 details how Pershing handles undocumented accounts.
Absent a form, IRS presumption rules [as provided in IRS Reg.
Sec. 1.1441-1(b)(3)(iii)(C)] are followed to determine tax treatment.
2. If funds are distributed to a nonresident alien or foreign estate
and the account is not documented with a W-8BEN, then
30% nonresident alien tax must be withheld from the gross
distribution amount.
Each grid has three lines, one for each possible scenario. On the
following page is a grid with a written description of each scenario.
71
retirement Product Tax Information
foreign distribution tax treatment grids
GRID #1: Documented Account: Valid IRS Form W-8BEN or W-9 on File
IRS W-8BEN
on File
Treaty Benefits
Claimed
IRS W-9 on File
Zero Treaty
Country
SSN
Tax Type
Required
Minimum W/H
IRS Tax Form
#1
Yes
No
No
N/A
N/A
NRA
30%
1042-S
#2
Yes
Yes
No
Yes*
N/A
NRA
Treaty Rate
1042-S
#3
No
N/A
Yes
N/A
N/A
FED
10%
1099-R
>Documented Account—Scenario #1 (Nonresident Alien or Foreign
>Documented Account—Scenario #3 (U.S. Person): A foreign
Estate): A foreign distribution is taken and a valid W-8BEN
form is on file. Treaty benefits are not claimed on the form and
a W-9 form is not on file. Whether the foreign address is in a
“zero treaty country” (as defined on page 73) is not applicable
to the determination of tax treatment. Nonresident alien tax will
be withheld from the distribution at a rate of 30% of the gross
distribution amount. IRS Form 1042-S will be mailed to recipients
(as noted on page 73) and transmitted to the IRS to report the
activity for the year.
distribution is taken and a valid W-8BEN form is not on file. Since
there is no W-8BEN form on file, the claim of treaty benefits is not
applicable to the determination of tax treatment. A W-9 form is
on file for the account. Whether there is an SSN on record for the
account or if the foreign address is in a “zero treaty country”
(as defined on page 73) is not applicable to the determination of
tax treatment. Federal tax will be withheld from the distribution at
a minimum rate of 10% of the gross distribution amount. IRS Form
1099-R will be mailed to recipients and transmitted to the IRS to
report the activity for the year.
>Documented Account—Scenario #2 (Nonresident Alien or Foreign
Please note: If both documents are on file, then the most recently
received valid document will dictate tax treatment. IRS Form W-9
is valid indefinitely except when there is a change in circumstances
that requires different tax documentation. W-8BEN forms generally
expire on December 31 of the third year following the year the form
is signed and dated.
Estate): A foreign distribution is taken and a valid W-8BEN form is
on file. Treaty benefits are claimed on the form and a W-9 form is not
on file. There is an SSN or ITIN on file for the account. Whether the
foreign address is in a “zero treaty country” (as defined on page 73)
is not applicable to the determination of tax treatment. Nonresident
alien tax will be withheld from the distribution at the treaty rate of the
gross distribution amount (see the country lists on page 73).
IRS Form 1042-S will be mailed to recipients (as noted on page 73)
and transmitted to the IRS to report the activity for the year.
*An SSN or ITIN is required to claim a reduced treaty rate.
GRID #2: Undocumented Account: IRS Presumption Rules
IRS W-8BEN
on File
Treaty Benefits
Claimed
IRS W-9 on File
SSN
Zero Treaty
Country
Tax Type
Required
Minimum W/H
IRS Tax Form
#1
No
N/A
No
Yes
Yes
FED
10%
1099-R
#2
No
N/A
No
Yes
No
NRA
30%
1042-S
#3
No
N/A
No
No
N/A
NRA
30%
1042-S
>Undocumented Account—Scenario #1 (U.S. Person): A foreign
>Undocumented Account—Scenario #3 (Nonresident Alien or
distribution is taken and either a valid W-8BEN or W-9 form is not on
file with Pershing. There is an SSN on record for the account and the
foreign address is in a “zero treaty country” (as defined on page 73).
Federal tax will be withheld from the distribution at a minimum rate of
10% of the gross distribution amount. IRS Form 1099-R will be mailed to
recipients and transmitted to the IRS to report the activity for the year.
>Undocumented Account—Scenario #2 (Nonresident Alien or
Foreign Estate): A foreign distribution is taken and either a valid
W-8BEN or W-9 form is not on file with Pershing. There is an
SSN on record for the account but the foreign address is not in a
“zero treaty country” (as defined on page 73). Nonresident alien
tax will be withheld from the distribution at a rate of 30% of the
gross distribution amount. IRS Form 1042-S will be mailed to
recipients (as noted on page 73) and transmitted to the IRS to
report the activity for the year.
72
Foreign Estate): A foreign distribution is taken and either a valid
W-8BEN or W-9 form is not on file with Pershing. There is not
an SSN on record for the account. Whether the foreign address
is in a “zero treaty country” or not is immaterial to tax treatment
determination. Nonresident alien tax will be withheld from the
distribution at a rate of 30% of the gross distribution amount.
IRS Form 1042-S will be mailed to recipients (as noted on page 73)
and transmitted to the IRS to report the activity for the year.
retirement Product Tax Information
IRS Publication 515 and IRS Form 1042-s
>IRS Publication 515: Withholding of Tax on
Nonresident aliens and Foreign Entities
IRS Publication 515 contains a table with treaty rates for withholding
from pension and annuity distributions to nonresident aliens
and foreign entities. If a country is not noted below, then the
nonresident alien rate is generally 30% of the gross distribution
amount. To receive the reduced rate, an account holder must have
a certified IRS Form W-8BEN, in which treaty benefits are claimed,
on file with Pershing and coded in Pershing’s system.
Zero Treaty Countries (0% Nonresident Alien tax)*: Ashmore and
Cartier Islands, Australia, Austria, Bangladesh, Barbados, Belgium,
Bulgaria, China, Christmas Island, Cocos (Keeling) Islands, Coral
Sea Island Territory, Cyprus, Czech Republic, Egypt, Estonia, Finland,
Germany, Greece, Hungary, Iceland, India, Ireland, Israel, Italy,
Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg,
Malta, Mexico, Morocco, Netherlands, New Zealand, Norfolk Island,
Northern Ireland, Norway, Pakistan, Portugal, Romania, Russia,
Slovak Republic, Slovenia, Spain, Sri Lanka, Sweden, Switzerland,
Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United
Kingdom and Venezuela.
>U.S. Tax Treatment
For purposes of the tax treatment, the United States includes U.S.
military bases and U.S. possessions.
>U.S. Possessions*
American Samoa, Baker Island, Guam, Howland Island, Jarvis
Island, Johnston Atoll, Kingman Reef, Marshall Islands, Micronesia,
Midway Islands, Navassa Island, Northern Mariana Island, Palmyra
Atoll, Puerto Rico, Trust Territory of the Pacific Island, U.S. Virgin
Islands and Wake Island
>IRS Form 1042-S
IRS Form 1042-S (not Form 1099-R) is sent to retirement account
holders to report nonresident alien distributions. These forms will
be mailed to recipients by the March 17, 2014, IRS deadline, and
copies will be available on or around that date in e-Document
Suite via NetX360. Of note, the Box 1 Income Code is 14, the gross
amount of the distributions will be reported in Box 2, the applicable
tax rate will be in Box 5 and the amount of nonresident alien
withholding (if any) will be reported in Box 7. (Please refer to page
48 for a sample of IRS Form 1042-S.)
* IRS Publication 515 posted March 30, 2013.
Reduced Treaty Countries (15% Nonresident Alien tax)*: Canada,
Indonesia and South Africa
73
retirement Product Tax Information
IRS Form 990-T—Exempt Organization Business Income Tax Return
As an IRS-approved nonbank (for third-party retirement account
trustees), custodian or servicing agent, Pershing is required to file with
the IRS Form 990-T–Exempt Organization Business Income Tax Return,
which may include IRS Form 8886–Reportable Transaction Disclosure
Statement, and applicable State Tax Returns to report unrelated business
taxable income (UBTI) for tax-deferred accounts, including, IRAs, SEPs,
savings incentive match plans for employees (SIMPLEs), Roth IRAs and
Coverdell ESAs that have $1,000 or more of UBTI annually.
These retirement and education savings accounts are usually
tax-deferred. Taxpayers and earnings generally are not taxed until the
funds are withdrawn. However, if a tax-deferred account invests in a
limited partnership (LP) that produces UBTI, the account may be taxed
on its share of the partnership’s income. If UBTI is earned and taxes
are due, we will remit the appropriate federal income tax payment to
the IRS or the state income tax payment to the applicable state taxing
authority from the tax-deferred account. If the account is closed after
December 31, 2013, or if sufficient cash is not available to pay the tax, we
will file the tax return(s) and refer the IRS or state taxing authority to the
account holder for collection of tax, interest and penalties. Please ensure
that cash is in these accounts in order to satisfy the tax, penalties and
interest due. Payments made with funds from outside the tax-deferred
account are considered contributions to the tax-deferred accounts that
may cause the account to have an impermissible excess contribution.
We will not file returns or pay amounts due for accounts that were
closed as of December 31, 2013.
Pershing has been tracking net operating losses (NOLs) from the
account’s partnership investments since 2003. Tax returns will be
prepared using the NOL information we have on file. In the event
that your client’s tax-deferred account incurred losses prior to 2003
that can be used to offset current-year income, evidence must be
submitted to substantiate the losses. Appropriate evidence of prioryear losses can be found on the prior year’s Schedule K-1 forms.
Schedule K-1 forms can be obtained from the LPs in which the taxdeferred account is currently or previously invested. Pershing does
not guarantee the use of any prior year’s losses.
If we receive the 2013 Schedule K-1 from the LPs after
March 10, 2014, Pershing will have the tax returns prepared by
PricewaterhouseCoopers, filed and tax paid in approximately three
weeks following the receipt of the Schedule K-1 form(s). In this case, the
2013 tax return will not be filed with the IRS and for any applicable state
by April 15, 2014. However, if the account has an EIN on file, Pershing will
file an extension on IRS Form 8868 with the IRS by April 15, 2014, to
request additional time to file the return. A request to extend the time to
file does not extend the time to pay tax. The IRS (and states) will impose
penalties and interest for late payment of tax, or failure to pay estimated
tax. PricewaterhouseCoopers will calculate the applicable penalties and
interest and add it to the tax due on your client’s return.
The client communication mailed to account holders will include a
letter explaining the UBTI process, a copy of their tax return(s), a
schedule reflecting the name of the LPs and the UBTI earned.
Requests for the correction of the tax return(s) can be submitted to
Pershing via the UBTI Correction Request Form. Correction requests
may include, but are not limited to:
>Submission for additional NOLs for years prior to 2003
>Submission for NOLs for accounts opened during 2013
Please note: Please provide prior-year Schedule K-1s to
substantiate the information on the correction
>Amended Schedule K-1 from an LP reflecting additional
or different information
Pershing’s Tax Reporting department may need to speak with you about
these correction requests, so please be sure you provide a contact name,
telephone number and a signature of the representative of the financial
organization accompanied by the appropriate paperwork.
Please either fax or mail correction requests to:
Pershing LLC
Attention: Tax Reporting Department
One Pershing Plaza, 7th Floor
Jersey City, New Jersey 07399
Direct Fax Number: (866) 355-5572
When we receive the 2013 tax information (Schedule K-1) from the
LPs by March 10, 2014, Pershing will have tax returns prepared by
PricewaterhouseCoopers, filed and tax paid by April 15, 2014.
Please note: Estimated tax payment penalties and interest may be
assessed by the IRS in the event that quarterly estimated tax payments
were not made in sufficient amounts from the tax-deferred account
during 2013. This type of penalty applies to your clients if their 2013 tax
due is in excess of $500.00. In these cases, PricewaterhouseCoopers
will calculate the estimated tax payment penalty and interest and add it
to the tax due on your client’s return.
Requests for corrections are reviewed upon receipt, and are approved
once we have received the necessary documentation. If the request
is not in proper order, you will be contacted within 48 hours of the
receipt of the correction. If applicable, corrected tax return(s) will be
mailed to your client. The corrected tax return will be filed with the
IRS and state, if applicable, with the appropriate tax payment.
74
retirement Product Tax Information
IRS Form 990-T—Exempt Organization Business Income Tax Return
>REPORTS AND ONLINE DOCUMENTATION
>FEES
The UBTI Status Report (IRA984R0) will be available in Report
Center via NetX360 by early April. This report is updated as
appropriate. Accounts requiring the preparation of an IRS Form
990-T will be added to this report as Pershing receives, reviews
and updates Schedule K-1 information and determines taxes due.
We strongly recommend that you review this report, as it reflects
your clients who are subject to this filing. In addition, it will help you
determine if cash is available to satisfy any outstanding liability.
For each tax return prepared and filed, Pershing applies a filing fee
to the applicable tax-deferred account.
>ADDITIONAL INFORMATION
Should you require additional information regarding these tax
returns, please refer to the IRS Instructions to IRS Form 990-T,
IRS Forms 8886 or the applicable State Tax Form instructions.
The instructions can be found on the IRS website, irs.gov, or the
applicable state tax authority website, as appropriate.
To access this report, click on the Service and Operations tab in
NetX360 and select Report Center. Click on Report Search and
enter the name of the report or the report identification number.
Client communications regarding UBTI will be imaged in Online
Documents in NetX360 after the IRS Form 990-T has been filed
with the IRS for each account holder in the process.
990-T
Form
Department of the Treasury
Internal Revenue Service
Check box if
A
address changed
B Exempt under section
)(
)
501(
408(e)
220(e)
408A
530(a)
Exempt Organization Business Income Tax Return
OMB No. 1545-0687
2012
3
(and proxy tax under section 6033(e))
For calendar year 2012 or other tax year beginning
, 2012,
3 and
▶ See separate instructions.
ending
, 20
.
Name of organization (
Check box if name changed and see instructions.)
Print
Number, street, and room or suite no. If a P.O. box, see instructions.
or
Type
City or town, state, and ZIP code
Open to Public Inspection for
501(c)(3) Organizations Only
D Employer identification number
(Employees’ trust, see instructions.)
E Unrelated business activity codes
(see instructions)
529(a)
C Book value of all assets
at end of year
F Group exemption number (see instructions) ▶
G Check organization type ▶
501(c) corporation
501(c) trust
401(a) trust
H Describe the organization’s primary unrelated business activity. ▶
I During the tax year, was the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? . . ▶
If “Yes,” enter the name and identifying number of the parent corporation. ▶
J The books are in care of ▶
Telephone number ▶
Sample Tax Form
Part I
1a
b
2
3
4a
b
c
5
6
7
8
9
10
11
12
13
Exploited exempt activity income (Schedule I) .
Advertising income (Schedule J) . . . . .
Other income (see instructions; attach statement) .
Total. Combine lines 3 through 12 . . . .
Part II
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Unrelated Trade or Business Income
(A) Income
Gross receipts or sales
Less returns and allowances
c Balance ▶
Cost of goods sold (Schedule A, line 7) . . . . . . .
Gross profit. Subtract line 2 from line 1c . . . . . . .
Capital gain net income (attach Schedule D) . . . . .
Net gain (loss) (Form 4797, Part II, line 17) (attach Form 4797)
Capital loss deduction for trusts . . . . . . . . .
Income (loss) from partnerships and S corporations (attach statement)
Rent income (Schedule C) . . . . . . . . . . .
Unrelated debt-financed income (Schedule E) . . . . .
Interest, annuities, royalties, and rents from controlled
organizations (Schedule F) . . . . . . . . . . .
Investment income of a section 501(c)(7), (9), or (17)
organization (Schedule G) . . . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
(B) Expenses
Other trust
Yes
No
(C) Net
1c
2
3
4a
4b
4c
5
6
7
8
9
10
11
12
13
Deductions Not Taken Elsewhere (see instructions for limitations on deductions) (except for contributions,
deductions must be directly connected with the unrelated business income)
Compensation of officers, directors, and trustees (Schedule K) . . . . . . . . . . . .
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . .
Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . .
Bad debts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest (attach statement) . . . . . . . . . . . . . . . . . . . . . . . .
Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charitable contributions (see instructions for limitation rules) . . . . . . . . . . . . .
Depreciation (attach Form 4562) . . . . . . . . . . . . .
21
Less depreciation claimed on Schedule A and elsewhere on return . .
22a
Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions to deferred compensation plans
. . . . . . . . . . . . . . . . .
Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . .
Excess exempt expenses (Schedule I) . . . . . . . . . . . . . . . . . . . .
Excess readership costs (Schedule J) . . . . . . . . . . . . . . . . . . . .
Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . .
Total deductions. Add lines 14 through 28
. . . . . . . . . . . . . . . . . .
Unrelated business taxable income before net operating loss deduction. Subtract line 29 from line 13
Net operating loss deduction (limited to the amount on line 30) . . . . . . . . . . . .
Unrelated business taxable income before specific deduction. Subtract line 31 from line 30 . . .
Specific deduction (generally $1,000, but see line 33 instructions for exceptions) . . . . . .
Unrelated business taxable income. Subtract line 33 from line 32. If line 33 is greater than line 32,
enter the smaller of zero or line 32 . . . . . . . . . . . . . . . . . . . . . .
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 11291J
75
14
15
16
17
18
19
20
22b
23
24
25
26
27
28
29
30
31
32
33
34
3
Form 990-T (2012)
retirement Product Tax Information
IRS Form 990-T—Exempt Organization Business Income Tax Return (CONTINUED)
Page 2
Form 990-T (2010)
Part III
35
Tax Computation
Organizations Taxable as Corporations. See instructions for tax computation. Controlled group
members (sections 1561 and 1563) check here ▶
See instructions and:
a
Enter your share of the $50,000, $25,000, and $9,925,000 taxable income brackets (in that order):
(2) $
(3) $
(1) $
b Enter organization’s share of: (1) Additional 5% tax (not more than $11,750)
$
(2) Additional 3% tax (not more than $100,000) . . . . . . . . .
$
c Income tax on the amount on line 34 . . . . . . . . . . . . . . . . . . . . ▶
36
Trusts Taxable at Trust Rates. See instructions for tax computation. Income tax on
the amount on line 34 from:
Tax rate schedule or
Schedule D (Form 1041) . . . . . ▶
37
Proxy tax. See instructions . . . . . . . . . . . . . . . . . . . . . . . ▶
38
Alternative minimum tax . . . . . . . . . . . . . . . . . . . . . . . . .
39
Total. Add lines 37 and 38 to line 35c or 36, whichever applies . . . . . . . . . . . .
Sample Tax Form
Part IV
40a
b
c
d
e
41
42
43
44a
b
c
d
e
f
g
35c
36
37
38
39
Tax and Payments
Foreign tax credit (corporations attach Form 1118; trusts attach Form 1116)
Other credits (see instructions) . . . . . . . . . . . . . .
General business credit. Attach Form 3800 . . . . . . . . . .
Credit for prior year minimum tax (attach Form 8801 or 8827) . . . .
Total credits. Add lines 40a through 40d . . . . . . . . . .
Subtract line 40e from line 39 . . . . . . . . . . . . . .
Other taxes. Check if from:
Form 4255
Form 8611
Form 8697
.
.
.
.
.
.
.
.
Form 8866
40a
40b
40c
40d
. . .
. . .
.
.
.
.
.
.
40e
41
42
43
.
.
Other (attach schedule) .
Total tax. Add lines 41 and 42 . . . . . . . . . . . . . . . . . . . . . . .
Payments: A 2009 overpayment credited to 2010
. . . . . . . .
44a
2010 estimated tax payments . . . . . . . . . . . . . . .
44b
Tax deposited with Form 8868 . . . . . . . . . . . . . . .
44c
Foreign organizations: Tax paid or withheld at source (see instructions) .
44d
Backup withholding (see instructions) . . . . . . . . . . . .
44e
Credit for small employer health insurance premiums (Attach Form 8941) .
44f
Other credits and payments:
Form 2439
Form 4136
Other
Total ▶
44g
45
Total payments. Add lines 44a through 44g . . . . . . . . . . . . . . . . . .
45
46
Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . . . ▶
46
▶
47
Tax due. If line 45 is less than the total of lines 43 and 46, enter amount owed . . . . . .
47
▶
48
Overpayment. If line 45 is larger than the total of lines 43 and 46, enter amount overpaid . .
48
▶
Enter the amount of line 48 you want: Credited to 2011 estimated tax
49
Refunded ▶ 49
Part V
Statements Regarding Certain Activities and Other Information (see instructions)
1
At any time during the 2010 calendar year, did the organization have an interest in or a signature
or other authority over a financial account (bank, securities, or other) in a foreign country?
If YES, the organization may have to file Form TD F 90-22.1, Report of Foreign Bank and
Financial Accounts. If YES, enter the name of the foreign country here ▶
2
3
Inventory at beginning of year
Purchases . . . . . .
Cost of labor . . . . . .
Additional section 263A costs
(attach schedule) . . . .
b Other costs (attach schedule)
5
Total. Add lines 1 through 4b
1
2
3
6
7
4a
4b
5
8
Yes
No
▶
Inventory at end of year
Cost of goods sold.
line 6 from line 5. Enter
in Part I, line 2 . . .
. . .
Subtract
here and
. . .
6
7
Do the rules of section 263A (with respect to
property produced or acquired for resale) apply
to the organization? . . . . . . . . .
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Date
Signature of officer
Paid
Preparer
Use Only
May the IRS discuss this return
with the preparer shown below
(see instructions)?
Yes No
▲
▲
Sign
Here
No
During the tax year, did the organization receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? .
If YES, see instructions for other forms the organization may have to file.
Enter the amount of tax-exempt interest received or accrued during the tax year ▶ $
Schedule A—Cost of Goods Sold. Enter method of inventory valuation
1
2
3
4a
Yes
Print/Type preparer’s name
Firm’s name
Preparer’s signature
▶
Title
Date
Check
if
self-employed
PTIN
Firm's EIN ▶
Firm’s address ▶
Phone no.
> UBTI CORRECTION REQUEST FORM FOR IRS FORM 990-T
Form 990-T (2010)
Please either fax or mail correction requests to:
The UBTI Correction Request Form must be used for all IRS Form
990-T correction requests.
Pershing LLC
Attention: Tax Reporting Department
One Pershing Plaza, 7th Floor
Jersey City, New Jersey 07399
Fax Number: (866) 355-5572
Correction requests should include all relevant documentation.
If the current-year income is misstated, a copy of the corrected
current-year Schedule K-1 should be attached to the correction
request. If the correction involves carrying forward losses from
prior years, Schedule K-1s for all prior years beginning with the
year in which the account acquired the partnership should be
attached. The partnership’s general partner furnishes K-1 forms.
Please note: Requests for corrections are reviewed upon receipt once
we have received the necessary documentation. UBTI correction
requests should be submitted on a UBTI Correction Request Form,
accompanied by supporting documentation. If the request is not in
proper order, a reject notification will be sent via Service Center within
48 hours of the correction request. If applicable, a corrected IRS Form
990-T will be mailed to your client. The newly calculated IRS Form
990-T will be filed with the IRS with the appropriate tax payment.
We may need to speak with you about these corrections, so please
provide the contact name, telephone number and signature of
a representative of the financial organization accompanied by the
appropriate paperwork.
76
retirement Product Tax Information
UBTI C o r r e c t i o n R e q u e s t
Fax to Pershing’s Tax Reporting department at (866) 355-5572.
Please print or type all information:
Date:Account Number:
requested by:
firm Name:
requester’s telephone: Number of pages:
Please update IRS Form 990-T as follows:
 Note: This request must be returned to Pershing within 10 days from the date of the client notification, or the original IRS Form 990-T will be filed with the IRS.
Reason For Correction:
The following documents are enclosed with error(s) clearly highlighted:
oK
-1 issued by Partnership showing prioryear losses
o Tax Information Statement (Form 990-T)
o Other:
Signature:
77
retirement Product Tax Information
FORM 5500 SCHEDULE C REPORTING
Sponsors of qualified retirement plans with 100 or more eligible
participants are required to file the Annual Return/Report of
Employee Benefit Plan Form 5500 with the U.S. Department of
Labor and the IRS. IRS Form 5500 includes Schedule C, which details
compensation in excess of $5,000 that service providers receive
from qualified retirement plans for services rendered to the plan.
Since Pershing LLC is a service provider to its qualified retirement
plan accounts, Pershing is required to disclose compensation it earns
and retains on these retirement accounts.
Please note: The 5500 Schedule-C filing responsibility is with the
IBD’s plan sponsor clients, not with Pershing. The plan sponsors
have until the last day of the seventh month following the plan-year
end to file IRS Form 5500.
Annually, by the end of March, Pershing will prepare Plan
Compensation Summary reports (a report for each plan where
Pershing earned and retained $5,000 or more in compensation
for the reporting period) and load to Report Center. You will be
notified when the report is available.
78
frequently asked questions
Frequently Asked Questions: Required Minimum Distributions (RMDs) and IRS Forms 1099-R, 1099-Q, 5498 and 5498-ESA
Q.Are there any changes to IRS Form 1099-R reporting for the tax
year 2013?
A.No. There are no changes to the format of the Form 1099-R
this year.
Q.Is my client required to attach a copy of IRS Form 1099-R to her
tax return?
A.It depends. Copy B of IRS Form 1099-R must be attached to the
individual’s income tax return only if federal taxes were withheld
from distributions during the year. The federal tax amount is
reflected in Box 4 of the form.
Q.My client received a distribution of $10,000 from her Pershing IRA
in 2013. The funds were used to purchase a first-time home, which
exempts the amount from the early distribution penalty. Box 7 of
IRS Form 1099-R reflects Code 1. When I contacted Pershing for a
correction, I was informed that Pershing reported the transaction
properly and the client should claim the exemption on her income
tax return. Is this true?
A.Yes. The IRS requires Pershing to use an exception code,
such as Code 2, but only in instances when we know that an
exception to the 10% penalty applies. For distributions such as
medical expenses, first-time home purchases or qualified higher
education expenses, Pershing uses Code 1 if the account owner
is under the age of 59½ when the distribution occurs. Your client
may claim the exception by filing IRS Form 5329 along with her
tax return.
Q.My client took a distribution from his IRA and made a rollover
contribution of the amount to his IRA within 60 days. Will he
receive an IRS Form 1099-R for the distribution?
A.Yes. The IRS requires that Pershing issue IRS Form 1099-R for all
distributions that occur from the retirement account, including
those that are rolled over in a timely manner. Your client will
receive IRS Form 5498 for the rollover to offset IRS Form 1099-R.
Q.My client made an excess IRA contribution in July 2012 and
removed the excess amount in January 2013 before the tax filing
deadline. Will my client receive IRS Form 1099-R or IRS Form
5498 for the distribution or contribution?
A.The IRS requires all IRA distributions to be reported on IRS Form
1099-R, including return of excess contributions. IRS Form 1099-R
will be issued for 2013, the year in which the distribution occurs.
Pershing will indicate Code P in Box 7 of IRS Form 1099-R to let
the IRS know that the distribution is attributable to an excess
contribution made for 2012. If the excess contribution was
attributable to 2013 and distributed in 2013, then IRS Form 1099-R
would have been issued for 2013 and the code in Box 7 would be
Code 8. The IRS also requires all IRA contributions to be reported on
IRS Form 5498, even if a contribution is later removed.
Q.My client established and funded a Traditional IRA in January
2013 and revoked the IRA seven days after signing the Adoption
Agreement. My client still received an IRS Form 1099-R for the
amount returned. Is this correct?
A.According to the IRS instructions for filing IRS Form 1099-R and
IRS Form 5498, IRA custodians must report revoked contributions
on IRS Form 1099-R. The distributed amount is reported as a
return of excess contribution. Your client will also receive IRS
Form 5498 for the contribution amount.
Q.Is my client required to attach a copy of IRS Form 5498 or Form
5498-ESA to her tax return?
A.No. The IRS does not require your client to attach these forms to
his or her tax return. Your client should retain the forms.
Q.Why does Pershing send IRS Form 5498 and IRS Form 5498-ESA
after the tax filing date?
A.The IRS deadline for contributing to an IRA is April 15 of
the following tax year. Since the filing requirements allow
contributions to be made until April 15, including those that are
mailed by April 15, the forms are prepared and mailed after the
tax filing date.
Q.My client did not receive an IRS Form 5498. My client was
informed that even though a contribution for 2013 was not made,
he should receive IRS Form 5498. Is this correct?
A.No. For IRAs that have no other reporting activity for 2013, such
as a contribution, conversion or recharacterization, Pershing is not
required to issue IRS Form 5498. We must report, however, the fair
market value of these IRAs. This information appears on your client’s
December 2013 account statement. If there are any changes to the
fair market value, the updated amount and a note indicating that the
amount has been updated will be included in the monthly statement
for the month in which the adjustment is made.
Q.My client deposited a 2013 SEP contribution to a SEP IRA in
January 2014. This amount, however, was not included on her
2013 IRS Form 5498. Is this correct?
A.Yes. The IRS requires Pershing to report SEP IRA and SIMPLE
IRA contributions, including salary reduction and deferral
contributions, for the calendar year that we receive the
contribution, regardless of the tax year to which the employer
might be contributing. Your client should report contributions
based on the tax year, not the calendar year. For contributions
that are clearly marked “previous year,” Pershing will add the
trailer “contribution received current year for previous year” to
the transaction.
Q.If my client revokes his 2013 IRA contribution in a timely manner,
will he still receive IRS Form 5498?
A.Yes. Any reportable contributions made for 2013, even if the
contribution is revoked before December 31, 2013, must be
reported on IRS Form 5498.
79
frequently asked questions
Q. What is an RMD?
A.Under federal regulations, owners of Traditional IRAs, SEP IRAs,
SIMPLE IRAs, qualified plans and 403(b) accounts are required
to distribute a certain amount from the retirement account each
year beginning with the year in which the participant reached
age 70½1. This amount is referred to as a required minimum
distribution, or RMD. Generally, the RMD for a year is determined
by dividing the previous year-end fair market value by the
retirement account owner’s life expectancy factor, which may
be obtained by using the life expectancy tables in IRS Publication
590. The RMD amount must be distributed by December 31 of
each year. An exception applies the year in which the participant
reaches age 70½, where he or she is allowed to defer the RMD
for that year until April 1 of the following year.
Q.What happens if the participant fails to withdraw the RMD amount?
A.If the participant fails to withdraw the RMD amount by the
applicable deadline, he or she will owe the IRS an excise
tax of 50% of the shortfall. This is referred to as an excess
accumulation tax.
Q.If the participant already filed his or her IRS Form 1040 for the
year, can he or she still file IRS Form 5329?
A.The participant should contact his or her tax professional for
assistance if he or she already filed his or her IRS Form 1040 for
the year and did not include IRS Form 5329.
Q.Where can the participant obtain IRS Form 5329?
A.IRS Form 5329 and the instructions are available online at irs.gov,
at most local libraries or by contacting the IRS at (800) 829-3676.
Q.Who should the participant contact for assistance with
completing IRS Form 5329?
A.The participant should contact a tax professional for assistance
with completing IRS Form 5329. The participant may also refer to
IRS Publication 910, Guide to Free Tax Services, for information on
free tax services offered by the IRS.
Q.Can Pershing assist the participant with requesting the waiver?
A.No. Such assistance must be provided by a party qualified to offer
tax advice. Pershing does not provide tax advice.
Q.Will Pershing be able to process and report the withdrawal as
a 2013 transaction if the participant submitted the withdrawal
request to the firm in 2013, but the request was not forwarded to
Pershing until 2014?
A.No. In order to be in compliance with IRS reporting requirements,
distribution requests processed after December 31, 2013, cannot
be reported for 2013. Requests to report transactions processed
after December 31, 2013, for tax year 2013 will not be honored.
Q.Is there any provision for waiving the penalty?
A.Yes. If the participant feels that there is a reasonable excuse
for failing to satisfy the RMD in a timely manner, he or she may
ask the IRS to waive the excess accumulation tax. According to
the instructions provided by the IRS in IRS Publication 590, the
participant must take the following steps when the waiver is
being requested:
– Withdraw the RMD amount
– File IRS Form 5329 with his or her Form 1040 (tax return)
– Pay any tax owed on the excess accumulation
– Attach a letter of explanation
If the IRS approves the request, it will refund the excess
accumulation taxes paid by the participant.
Please note:
– Pershing will report the distribution for the year it is processed.
– The participant is responsible for paying the excise tax to the
IRS when he or she files IRS Form 5329.
– If the participant elects to pay the excise tax from his or her
retirement account, it will be considered a distribution and will be
reported in the year it is processed.
1
Participant may be able to defer beginning the RMD until April 1 of the year after the year the individual retires from service with the employer that sponsored the plan. Participants should
refer to their plan administrator or the plan document for the rules that apply to the plan.
© 2014 Pershing LLC, member FINRA, NYSE, SIPC, is a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon). Trademark(s) belong to their respective owners.
For professional use only. Not for distribution to the public.
80