Stock Basis Reporting on Form 1099-B in 2011

Stock Basis Reporting on Form 1099-B in 2011

By Ron Cohen, CPA, MST
Greenstein, Rogoff, Olsen & Co., LLP

See the new Form 1099-B for 2011 that requires “cost basis” information.
Form 1099-B 2011

In the past, the client’s sometimes don’t know or can’t find their cost basis in stocks they have sold. Major stockbrokers have, in recent years, attempted to get the cost basis information for stocks held in a client’s account. If the shares were purchased with that broker, then the broker has that information, but if the shares were purchased, acquired by gift, inheritance, etc. outside the broker’s account, (e.g., when the customer worked with a different broker, or no broker was involved – as in the case of stock previously kept in a safe deposit box of years) they would often ask for that information in an attempt to permanently document it for the client…since all brokers get pesky phone calls from CPAs and other tax preparers asking for the client’s tax basis in stocks that are sold. So, more effort to document this info is productive for everyone.

More to the point, some taxpayers overstate their tax basis and cheat on their taxes. A higher cost basis means a lower taxable gain or higher tax-deductible loss on the sale of stocks or other transactions reported on Form 1040, Schedule D. Unless an IRS audit is conducted, the IRS had no internal way to confirm or dispute the taxpayer’s claimed cost basis.

As of Tax Year 2011, this new Form 1099-B will provide the IRS info, (just like a Form W-2, 1099-Misc, or 1099 for interest or dividends) that will be recorded on the IRS internal “transcript” for each taxpayer and will allow the IRS to manually, or by computer, “match” the cost basis reported by the taxpayer on Schedule D, and propose adjustments to the taxpayer’s tax return if the amounts disagree.

This is just one more step toward a “closed-loop system” for information reporting the IRS and Congress are moving toward to allow the IRS to more efficiently audit tax returns.

If you have any questions or comments, please call GROCO at (510) 797-8661.

From the IRS:
IRS Issues Proposed Regulations on New Basis Reporting Requirement

WASHINGTON — The Internal Revenue Service today issued proposed regulations under a new law that will require reporting of basis and other information by stockbrokers and mutual fund companies for most stock purchased in 2011 and all stock purchased in 2012 and later years. The reporting will be to investors and the IRS. This additional reporting will be optional for stock purchased prior to these dates.

“This important reporting change will improve tax compliance while reducing the recordkeeping and paperwork burden for millions of investors,” said IRS Commissioner Doug Shulman. “These taxpayers will now receive the information they need to more easily report their gains and losses correctly.”

These proposed regulations, posted today on the Federal Register, implement a provision in the Energy Improvement and Extension Act of 2008. Among other things, the proposed regulations describe who is subject to this reporting requirement, which transactions are reportable and what information needs to be reported. They also provide numerous examples.

The IRS also released for comment a draft version of the 2011 Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, that stockbrokers and mutual fund companies will use to make these expanded year-end reports. Form 1099-B, long used to report sales prices, will be expanded in 2011 to include the cost or other bases of stock and mutual fund shares sold or exchanged during the year. The expanded form will also be used to report whether gain or loss realized on these transactions is long-term (held more than one year) or short-term (held one year or less), a key factor affecting the tax treatment of gain or loss. The expanded Form 1099-B, to be first used for calendar-year 2011 sales, must be filed with the IRS and furnished to investors in early 2012.

The IRS welcomes comments on these proposed regulations and the draft 2011 Form 1099-B. Comments must be received by Feb. 8, 2010, and maybe submitted electronically, by mail or hand-delivered to the IRS. A public hearing is scheduled for Feb. 17, 2010, at the IRS New Carrollton Federal Building, 5000 Ellin Road, Lanham, Maryland 20706. The proposed regulations provide details on submitting comments or participating in the public hearing.

The IRS will work closely with stakeholder groups to ensure a smooth implementation of this new program.

Basis Reporting by Securities Brokers and Basis Determination for Stock; Proposed Rule

You can click this link to the very detailed proposed rules:


We hope you found this article about “Stock Basis Reporting on Form 1099-B in 2011” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe our YouTube Channel for more updates.

Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.


Alan L. Olsen, CPA, Wikipedia Bio is a proud sponsor of The American Dreams Show.



The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4 (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

Posted in
Five Great Reasons to Attend Venture Capital Seminar 2 of 6

Five Great Reasons to Attend Venture Capital Seminar 2 of 6

Impact Venture Capital & GROCO’s “Venture Vision” Seminar 2 of 6 (To register FREE, click here.) This free online instructional seminar on January 11, 2023, at 10 AM is an excellent opportunity to learn more about the risks and rewards associated with venture capital (VC) investments. By covering topics such as the stages of funding,…

Mastering Comprehensive Financial Planning with Bill Gombert

Mastering Comprehensive Financial Planning with Bill Gombert

Introduction: In this interview, Alan Olsen, CPA and featured guest Bill Gombert discuss comprehensive financial planning and much more. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is Bill Gombert. Bill, welcome to today’s show. Bill Gombert Thank you very much pleasure to be here. Alan Olsen So, Bill, you’re…

Building Conscious Communities with Brett Kaufman

Building Amazing Conscious Communities with Brett Kaufman

Introduction: In this interview, Alan Olsen, CPA and featured guest Brett Kaufman discuss Building Conscious Communities and much more. This Transcript of Alan and Brett’s discussion of conscious community building has been generated by software and may have inaccuracies: Alan Olsen So Brett in our segments here in American Dreams, we talked about pathways of life and things…

5 reasons to attend free venture capital seminar 2 of 6

Unveiling the Venture Vision: 12 Insights from the Frontline Capital

Insights Into Venture Capital Investing From Seminar 1 of 6 (To register for seminar 2 of 6 FREE, click here.) “In an era where financial landscapes are constantly being reshaped, it’s crucial for investors to stay ahead of the curve. The Venture Vision Webinar, a joint initiative by GROCO and Impact Venture Capital, recently hosted…