2011taxguide (page 26 - oid adjust)

8/12/2019 2011TaxGuide (Page 26 - OID Adjust)

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A Comprehensive Reference Guide to Your 2011 Tax Information Statement

Read Before You File

If you held a mutual fund, real estate investment trust (REIT), widely held fixed investment trust (WHFIT), widely held mortgage trust (WHMT) o

unit investment trust (UIT) in 2011, we may send you a revised Tax Information Statement. Please be aware that some issuers did not make their fin

distribution information available until after January 2012. See page 20 for more information.

2011 Tax Guide

This comprehensive and informative guide is a tool to assist you or your tax professional with the

preparation of your tax returns. It contains examples, explanations and illustrations from Internal

Revenue Service (IRS) schedules to help you understand your Tax Information Statement.

If your account was transferred to our firm during 2011, your Tax Information Statement only repo

investment activity that occurred since you began doing business with us.

We hope you will find this reference guide to be a useful and effective tool in the preparation

of your 2011 tax returns.

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 taxpaye

for the purpose of avoiding tax penalties. Clients should contact their tax professional to discuss the appropriate federal, foreign, state and local ta

treatment of transactions. This guide and the Tax Information Statement referenced herein are solely intended to assist in accumulating data to prepa

income tax returns and should not be construed as tax advice. All amounts and transactions displayed in this guide are for illustration only, and do no

represent actual transactions. Accordingly, no guidance should be inferred as to any specific transaction from the illustrations in this guide.


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Important Information for Preparing Your

2011 Income Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Cost Basis Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

IRS Form 1099-B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Schedule of Realized Gains and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IRS Form 8949Sales and Other Dispositions of Capital Assets,

Wash Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Introducing Your Tax Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

General Information About Your Tax Information Statement . . . . . . . . . . . . . . . 8

Proceeds From Broker and Barter Exchange Transactions

IRS Form 1099-B, Schedule D (Capital Gains and Losses) . . . . . . . . . . . . . 9

Sample of the Tax Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

IRS Forms 8949 and 1040, Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Schedule of Realized Gains and Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Regulated Futures Contracts IRS Forms 1099-B and 6781. . . . . . . . . . . . . . . . 13

Interest Income IRS Form 1099-INT, Schedule B . . . . . . . . . . . . . . . . . . . . . . . . 14

Dividends and Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Capital Gain Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Margin Interest Expense IRS Form 4952 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Original Issue Discount (OID) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

IRS Form 1099-OID, Schedule B,Information Reported

on IRS Form 1099-OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Calculation and Adjustment of Original Issue Discount (OID) . . . . . . . . . . . . 2

Information Reported on IRS Form 1099-MISC . . . . . . . . . . . . . . . . . . . . . . .2

Additional Information

Items That We Are Required to Report to the IRS, Items That We Are Not Required to Report to the IRS . . . . . . . . . . . . . . . . 2

Municipal Tax-Exempt Interest and Municipal Original

Issue Discount (OID) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Collateralized Debt Obligations (CDOs), Collateralized

Mortgage Obligations (CMOs) and Real Estate Mortgage

Investment Conduits (REMICs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Additional Written StatementWidely Held Fixed Investment

Trusts (WHFITs) and Widely Held Mortgage Trusts (WHMTs) . . . . . . . . . . . . . 3

Supplemental InformationRoyalty Trusts and Holding

Company Depository Receipts (HOLDRS) Trusts . . . . . . . . . . . . . . . . . . . . . . . 3

Retirement Account Distributions IRS Form 1099-R. . . . . . . . . . . . . . . . . . . . . 3

Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

IMPORTANT INFORMATION FOR PREPARING YOUR 2011 INCOME TAX RETURN

Before preparing your tax return, please note the following important information. This guide has been tailored for use by individual U.S. taxpayers(who file IRS Form 1040 and are investors for tax purposes and not traders or dealers in securities for whom special tax rules may apply) anddescribes how and where to report certain transactions on your federal income tax return. Your tax professional can provide further advice as to federal,foreign, state and local tax reporting requirements.

> SEPARATE ACCOUNTSYou will receive a separate Tax Information Statement for each of yourbrokerage accounts.

> TRANSFERRED ACCOUNTSIf your account was transferred to us during 2011, your TaxInformation Statement only includes activity (including incomeaccruals) during the time you conducted business with us. Your formerfirm should provide IRS Form 1099 for activity thatoccurred before your account was transferred.

> IRS PUBLICATIONSIRS publications can be obtained from your local IRS office by callingthe IRS Forms Distribution Center at (800) TAX-FORM, or visitingthe IRS website at www.irs.gov. For instance, the following IRSpublications provide useful tax information related to reporting securitiestransactions: 550, Investment Income and Expenses; 938, Real EstateMortgage Investment Conduits (REMICs) Reporting Information (andOther Collateralized Debt Obligations [CDOs]); and 1212, Guide toOriginal Issue Discount (OID) Instruments.

> CORRECTIONSPlease review your Tax Information Statement. If the statement isincorrect, contact your investment or tax professional. If necessary,

the correct information will be promptly provided to the IRS and wwill mail a revised Tax Information Statement to you.

> YOUR TAX INFORMATION STATEMENT IS A SUBSTITUT

FOR THE FOLLOWING IRS FORMS:1099-B Proceeds from Broker and

Barter Exchange Transactions Pages 9-10

1099-INT Interest Income Pages 14-1

1099-DIV Dividends and Distributions Pages 17-2

1099-DIV Capital Gain Distributions Page 23

1099-OID Original Issue Discount Pages 25-2

1099-MISC Miscellaneous Income Page 28

> RETIREMENT ACCOUNT DISTRIBUTIONS PERSHING

SUBSTITUTE FORM1099-R Retirement Account Distributions Page 38

> DUPLICATE TAX FORMSIf you request a duplicate Tax Information Statement, we will mailit to the address of record for your account.

TABLE OF CONTENTS

This guide is not intended to provide tax advisory services. We suggest that you consult your tax professional to discuss the appropriate federal,

foreign, state and local tax treatment of your transactions. This guide, as well as your Tax Information Statement, are solely intended to assist you in

accumulating data to prepare your income tax returns and should not be construed or relied upon as tax advice. All amounts and transactions displayedin this guide are only illustrations and do not represent actual transactions. Accordingly, no guidance should be inferred as to any specific transaction

from the illustrations in this guide.


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On January 1, 2011, the new cost basis reporting requirements mandated by Congress, the Department of Treasury and the Internal Revenue Service(IRS) took effect. The new tax rules require brokers to report cost basis information when covered securities in your taxable account are sold, exchanged ortransferred. As a result, you will note changes to your Tax Information Statement.

COST BASIS REPORTING

> WHAT THE COST BASIS CHANGES MEAN TO YOUThe cost basis of covered stock (stock in a corporation acquired and soldor exchanged in a taxable account in 2011), and the proceeds of sale, will

be reported on IRS Form 1099-B. This form will also report whetherthe gain or loss is short term or long term and if any loss is subject todisallowance under the broker wash sale rule. Under the new rules, if yousold shares of stock in 2011 that were acquired before January 1, 2011,they are noncovered securities and their cost basis will not be reportedon the 1099-B. It is important to note that, starting for 2011, you must,in general, provide the cost basis for all sold securities on the recentlyintroduced Form 8949 (Sales and Other Dispositions of Capital Assets), aswell as on the Schedule D of IRS Form 1040 that is filed for the tax yearin which the security sale occurs.

> IMPORTANT TAX FORM CHANGES FOR TAX YEAR 2011The IRS has modified Form 1099-B and introduced a newForm 8949, entitled Sales and Other Dispositions of Capital Assets.

To help you understand the changes, brief descriptions of the formchanges are provided below.

IRS Form 1099-B. The IRS added new boxes to Form 1099-B forreporting the date of acquisition (box 1b), cost or other basis (box3), amount of loss disallowed due to a wash sale (box 5), whether theproperty sold is a covered or noncovered security transaction (box 6),and whether the gain or loss is short term or long term (box 8). The Ialso moved and renumbered other boxes on the form to accommodatcost basis reporting.

IRS Form 8949. The IRS has introduced Form 8949 for tax reportinpurposes starting for 2011. You or your tax preparer will be required trecord your gain and loss information on one or more 8949 forms ba

upon the information contained on your Form 1099-B. Form 8949 aSchedule D have combined instructions. You can find these instructioat irs.gov.

Other Important Information About Changes to Your 2011 Form 1099-B

The IRS has required us to modify Form 1099-B in order to accommodate required cost basis reporting information for 2011 tax reporting. When youreceive our new 1099-B, you will notice several changes. Please review the following information, which summarizes these important changes.

Long-term and short-term transactions are segregated in your 1099-B form in a format comparable to the Form 8949, for dispositions of covered securities.Noncovered securities transactions will also be displayed separately from covered securities transactions and boxes 1b, 3, 5 and 8 will be left blank. The new1099-B format will simplify your process of recording or transcribing each transaction from the 1099-B to IRS Form 8949.

Below is a list of the three 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 Was Reported to the IRS 1. Part I Short-Term Capital Gains and LossesAssets Held One Yearor Less and Box (A)

2. Long-Term Transactions for Which Basis Was Reported to the IRS 2. Part II Long-Term Capital Gains and LossesAssets Held MoreThan One Year and Box (A)

3. Transactions for Which Basis Was Not Reported to the IRS 3. Part I or Part II and Box (B) or Box (C)

Below is a list of the boxes for Form 1099-B, which will report information for covered securities transactions and the corresponding columns on Form 8949:

Form 1099-B Box Corresponding Form 8949 Column

Box 9Description and Quantity (a) Description of property Box 1aDate of Sale or Exchange (d) Date sold

Box 1bDate of Acquisition (c) Date acquired

Box 2Gross Proceeds (Less Commissions and Fees) (e) Sales price

Box 3Cost or Other Basis (f ) Cost or other basis

Box 5Wash Sale Loss Disallowed (g) Adjustments to gain or loss and (b) Code, if any, for column (g)*

* Enter the amount of the nondeductible loss as a positive number in column (g) and enter code W in column (b). Columns (g) and (b) are used for purposes other than wash sales. For more information about thcolumns please see pages D-8 to D-10 of the 2011 combined IRS instructions for Schedule D and Form 8949. For more information about Wash Sales see page D-4 of the combined instructions.


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Form 1099-B

Here is a sample of what your 1099-B will look like in your 2011 tax statement and a display of the example noted below:

SAMPLESTATEMENT

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2011 Form 1099-B PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS OMB No. 1545-0715(For individuals, report details on Form 8949 and Form 1040, Schedule D, Line 1, 2, 8 or 9.)

Date of Saleor Exchange

(Box 1a)

Date ofAcquisition

(Box 1b)

Covered orNoncovered

(Box 6)DispositionTransaction Quantity

Gross Proceeds Less Commissions

and Fees(Box 2)

Cost orOther Basis

(Box 3)

Federal IncomeTax Withheld

(Box 4)

Wash SaleLoss Disallowed

(Box 5)

Type ofGain

or Loss(Box 8)

LossNot

Allowed(Box 15)

Short-Term Transactions for Which Basis Was Reported to the IRS; Report on Form 8949, Part I, with Box A checked.

Description (Box 9): ABC Company CUSIP: 123456ABC

3/15/2011 Various Covered Sale 200 2,000.00 2,200.00 560.00 200.00 Short-Term

12/15/2011 1/15/2011 Covered Sale 100 2,000.00 1,000.00 560.00 Short-Term

Description (Box 9):DEF Company CUSIP: 234567DEF

4/15/2011 Various Covered Sale 400 4,000.00 2,600.00 1,120.00 Short-Term

Total Short-Term Covered 8,000.00 5,800.00 2,240.00 200.00

Transactions for Which Basis Was Not Reported to the IRS; Report on Form 8949 with Box B checked, in either Part I or Part II as appropriate.

Description (Box 9): ABC Company CUSIP: 123456ABC

3/15/2011 Noncovered Sale 400 4,000.00 1,120.00


4/15/2011 Noncovered Sale 800 8,000.00 2,240.00

Total Noncovered 12,000.00 3,360.00

Total 20,000.00 5,800.00 5,600.00 200.00

This is important tax information and is being furnished to the Internal Revenue Service (I RS). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income i s taxable

and the IRS determines that it has not been reported.

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1. COVEREDFor covered securities transactions (identified in Box 6), the 1099-B formwill report the Date of Sale or Exchange (Box 1a), Date of Acquisition(Box 1b), Gross Proceeds (Box 2), Cost or Other Basis (Box 3), FederalIncome Tax Withheld (Box 4), Wash Sale Loss Disallowed (Box 5) andwhether the gain or loss is short term or long term (Box 8).

2. NONCOVEREDFor noncovered securities transactions (Box 6), the 1099-B form willreport the Date of Sale or Exchange (Box 1a), Gross Proceeds (Box 2),and Federal Income Tax Withheld (Box 4). The date of acquisition, costor other basis, type of gain or loss and whether any loss is disallowed dueto a wash sale, are intentionally left blank, and will not be reported to theIRS. Also, noncovered securities transactions are grouped together by theDate of Sale or Exchange, regardless of the holding period. As a taxpayeryou are responsible for reporting the cost basis and resulting gain or lossrealized upon disposition of a noncovered asset.

3.EXAMPLE: COVERED VERSUS NONCOVEREDAs of January 1, 2011, the new regulations distinguish between coveredand noncovered securities. As a result of these changes, your security salesmay be divided and reported in one or more sections of the Form 1099-B.For example, you sold 1,200 shares of DEF Company on

April 15, 2011, of which you acquired 400 shares in 2011 and 800 sharesprior to 2011. The sale of the 400 shares acquired in 2011 will be treatedas a covered security sale transaction and reported in the short-term coveredsection (Short-Term Transactions for Which Basis Was Reported to theIRS). The sale of the 800 shares acquired prior to 2011 will be treated as anoncovered security sale transaction and reported in the noncovered section(Transactions for Which Basis Was Not Reported to the IRS).

Frequently Asked Questions

Q. WHY ALL THE CHANGES?

A. For 2011 tax return reporting purposes, the IRS requires filers of

Form 1099-Bto sort information within specific categories to assisttaxpayers with the preparation of their tax returns. The IRS introduced

a new form for 2011 Form 8949 as an intermediary step toreporting Sales and Other Dispositions of Capital Assetspriorto reporting them on Schedule D of Form 1040. The illustrationon page 11 provides a basic example of how you would use the

information received on your 2011 Form(s) 1099-Bin order tocomplete one or moreIRS Form 8949.

Please note that for certain transactions, investors shouldreport the results on IRS Forms 4797 (Sales of BusinessProperty) or 6781 (Gains and Losses From Section 1256Contracts and Straddles) for 2011 rather than on Form 8949prior to final reporting on Schedule D of Form 1040. Pleasesee your Form 1099-B instructions for more information.

Please see pages 9 through 11 for more information regarding the information provided on your Form 1099-B.


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Schedule of Realized Gains and Losses

If your financial firm subscribes to our premium Tax and Year-End Statement (TYES), the Schedule of Realized Gains and Lossessection will beprovided. There are significant changes to this section due to new cost basis reporting requirements. We do not directly report the information in thissection to the IRS. However, the information is used as the basis for information reported on your Form 1099-B.

Here is a sample of what your Schedule of Realized Gains and Losses will look like if you receive the TYES format. This example includes noncoveredsecurities transactions to stress the fact that cost basis information (though not reported to the IRS on Form 1099-B) will be displayed:

SAMPLESTATEMEN

T

Schedule of Realized Gains and Losses(We do not report this information to the IRS; it is used as the basis for reporting on Form 1099-B)


Date ofAcquisition

DispositionTransaction Quantity

GrossProceeds

Cost orOther Basis

OptionPremium


RealizedGain or Loss

DispositionMethod

Short-Term Transactions for Which Basis Was Reported to the IRS (Covered)

Description :ABC Company CUSIP: 123456ABC

3/15/2011 01/15/2011 Sale 100 1,000.0 0 1,200.0 0 (200. 00)3 0.00 FI

02/15/2011* Sale 100 1,000.00 1,000.00 0.00 FI

*Wash sale: 30 days added to holding period

200 2,000.00 2,200.00 (200.00) 0.00

12/15/2011 04/15/2011 Sale 100 2,000.00 1,000.00 1,000.00 FI

Description: DEF Company CUSIP: 234567DEF

04/15/2011 01/15/2011 Sale 200.124 2,000.00 1,000.00* 1,000.00 FI

*Original Cost Basis: 1,000.00 Gift Fair Market Value: 1,400.00

02/15/2011 Sale 200.124 2,000.00 1,600.00 400.00 FI

400.248 4,000.00 2,600.00 1,400.00

Total Short-Term Covered 8,000.00 5,800.00 (200.00) 2,400.00

Short-Term Transactions for Which Basis Was Not Reported to the IRS (Noncovered)


03/15/2011 11/15/2010 Sale 100 1,000.0 0 500. 00 500. 00 FI

Please Provide Sale 100 1,000.00 600.00 400.00 FI

200 2,000.00 1,100.00 900.00


04/15/2011 11/15/2010 Sale 200.124 2,000.00 1,000.00 1,000.00 FI

12/15/2010 Sale 200.124 2,000.00 1,200.00 800.00

400.248 4,000.00 2,200.00 1,800.00

Total Short-Term Noncovered 6,000.00 3,300.00 2,700.00

Total Short-Term 14,000.00 9,100.00 (200.00 ) 5,100.00

Long-TermTransactions for Which Basis Was Not Reported to the IRS (Noncovered)


02/15/11 09/15/2009 Sale 100 900.00 100.00 100.00 800.00 FI

10/15/2009 Sale 100 900.00 200.00 700.00 FI

200 1,800.00 300.00 100.00 1,500.00

03/15/2011 11/15/2009 Sale 100 1,000.00 300.00 700.00 FI

12/15/2009 Sale 100 1,000.00 400.00 600.00 FI

200 2,000.00 700.00 1,300.00


04/15/2011 11/15/2009 Sale 200.124 2,000.00 600.00 1,400.00 FI

12/15/2009 Sale 200.124 2,000.00 800.00 1,200.00 FI

400.248 4,000.00 1,400.00 2,600.00

Total Long-Term Noncovered 7,800.00 2,400.00 100.00 5,400.00

Total Long-Term 7,800.00 2,400.00 100.00 5,400.00

Total Short-Term and Long-Term 21,800.00 11,500.00 100.00 (200.00 ) 10,500.00

3Realized loss is net of a disallowance due to a wash sale.

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Transaction lots will be grouped and sorted by security within thefollowing subsections:

1.Short-Term Transactions for Which Basis Was Reported to theIRS (Covered)

2.Short-Term Transactions for Which Basis Was Not Reported to theIRS (Noncovered)

3.Long-Term Transactions for Which Basis Was Reported to theIRS (Covered)NOTE:Long-term gains and losses occur when assets are disposedafter being held for more than a year. Generally, in 2011 long-termtransactions will not be covered since certain securities would need tohave been purchased and disposed in 2011 to be considered covered.This section is not represented in the sample above.

4.Long-Term Transactions for Which Basis Was Not Reported to theIRS (Noncovered)

Both covered and noncovered securities transactions are grouped by theirholding period, either short term (securities held for one year or less) orlong term (securities held for more than one year). The date of acquisitiocost or other basis, amount of loss disallowed due to a wash sale (using thbroker wash sale reporting rule), and type of gain or loss are included fo

both covered and noncovered transactions. The section also includes therealized gain or loss amount(s) (which are not provided on Form 1099-Bbecause it is not an IRS 1099-B form requirement for 2011).

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Date ofAcquisition


GrossProceeds

Cost orOther Basis



DispositionMethod


Description : ABC Compan y CUSIP: 123456ABC3/15/2011 01/15/2011 Sale 100 1,000.00 1,200.00 (200.00)3 0.00 FI

02/15/2011 Sale 100 1,000.00 1,000.00 0.00 FI

200 2,000.00 2,200.00 (200.00) 0.00

12/15/2011 04/15/2011 Sale 100 2,000.00 1,000.00 1,000.00 FI Wash sale: 59 days added to holding period


04/15/2011 01/15/2011 Sale 200.124 2,000.00 1,000. 00 1,000.00 FI

Gift Fair Market Value: 1,400.00

02/15/2011 Sale 200.124 2,000.00 1,600.00 400.00 FI

400.248 4,000.00 2,600.00 1,400.00



Description :ABC Company CUSIP: 123456ABC03/15/2011 11/15/2010 Sale 10 0 1,000.00 500.00 500.00 FI


200 2,000.00 1,100.00 900.00


04/15/2011 11/15/2010 Sale 200.124 2,000.00 1,000. 00 1,000.00 FI

12/15/2010 Sale 200.124 2,000.00 1,200.00 800.00

400.248 4,000.00 2,200.00 1,800.00


Total Short-Term 14,000.00 9,100.00 (200.00) 5,100.00

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Long-Term Transactions for Which Basis Was Not Reported to the IRS (Noncovered)

Description :ABC Company CUSIP: 123456ABC02/15/11 09/15/2009 Sale 100 900.00 100.00 800.00 FI

10/15/2009 Sale 100 900.00 200.00 700.00 FI

200 1,800.00 300.00 1,500.00

03/15/2011 11/15/2009 Sale 100 1,000.00 300.00 700.00 FI

12/15/2009 Sale 100 1,000.00 400.00 600.00 FI 200 2,000.00 700.00 1,300.00


04/15/2011 11/15/2009 Sale 200.124 2,000.00 600.00 1,400.00 FI

12/15/2009 Sale 200.124 2,000.00 800.00 1,200.00 FI

400.248 4,000.00 1,400.00 2,600.00

Total Long-Term Noncovered 7,800.00 2,400.00 5,400.00

Total Long-Term 7,800.00 2,400.00 5,400.00

Total Short-Term and Long-Term 21,800.00 11,500.00 (200.00) 10,500.00

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3SAMPLESTATEMENT


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IRS Form 8949Sales and Other Dispositions of Capital Assets

You will be required to record gain and loss information on one or more 8949 forms based upon the information displayed on your Form(s) 1099-B. Foryour convenience, the transactions are grouped by holding period (short term or long term) in a format comparable to the Form 8949, for dispositions ofcovered securities on the Form 1099-B, as well as for noncovered securities transactions within the Schedule of Realized Gains and Losses. This presentationof the data should assist with the completion of your 8949 forms.

Please see page 11 for more information regarding IRS Form 8949 and its use in the completion of Schedule D (Form 1040).

Wash Sales

Generally, a wash sale occurs when a covered or noncovered security isdisposed of at a loss and an identical or a substantially identical security ispurchased or acquired within the 30-day period before or after the sale.

IRS Form 1099-B Box 5: Wash Sale Loss Disallowed

A loss is reported as disallowed when the sale of a covered security is treated asa broker wash sale. This occurs when you re-purchase the identical security,as determined by CUSIP number, in the same brokerage account within the30-day period preceding or following the date of the original loss.

Other Important Points

Wash sale updates are only applied to nonretirement accounts with lonequity holdings.

The basis of stock or securities acquired 30 days before or after the salea loss, is adjusted to take into account the disallowed loss. The adjustmensures that the loss is not permanently disallowed but merely postponuntil the repurchased investment is sold.

The holding period of the stock or securities acquired includes the

holding period of those sold at a loss. Realized Gain/Loss and UnrealizeGain/Loss is based on the adjusted trade date of a replacement lot.

Please note- You are still obligated to apply the wash sale rules across allof your applicable brokerage accounts for substantially identical securitieswhen preparing your tax returns.

For additional information about wash sales, please refer to the following atirs.gov:2011 Instructions for Schedule D (and Form 8949) and IRS Pub. 550(Investment Income and Expenses).

SAMPLE

Form 8949Department of the TreasuryInternal Revenue Service (99)

Sales and Other Dispositions of Capital AssetsSee Instructions for Schedule D (Form 1040).

For more information about Form 8949, see www.irs.gov/form8949Attach to Schedule D to list your transactions for lines 1, 2, 3, 8, 9, and 10.

OMB No. 1545-0074

2011AttachmentSequence No. 12A

Name(s) shown on return Your social security number

Part I Short-Term Capital Gains and LossesAssets Held One Year or Less

Note: You must check one of the boxes below. Complete aseparate Form 8949, page 1, for each box that is checked.

*Caution.Do not complete column (b) or (g) until you have read the instructions for those columns (see the Instructions for ScheduleD (Form 1040)). Columns (b) and (g) do not apply for most transactions and should generally be left blank.

(A)Short-term transactions reported on

Form 1099-B with basis reported to the IRS

(B)Short-term transactions reported on Form

1099-B but basis not reported to the IRS

(C)Short-term transactions for which

you cannot check box A or B

1

(a)

Description of property

(Example: 100 sh. XYZ Co.)

(b)

Code, if any,for column (g)*

(c)

Dateacquired

(Mo., day, yr.)

(d)

Date sold

(Mo., day, yr.)

(e)

Sales price

(see instructions)

(f)

Cost or other basis

(see instructions)

(g)

Adjustments to

gain or loss, if any*

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Wash Sale Example

You acquired 100 shares of ABC Company for $1,200. You sell your100 shares for $1,000 and within 30 days from the sale date yourepurchase the same stock for $800. Because you repurchased theidentical stock, you cannot deduct the loss of $200 on the sale. Thatloss is disallowed and that amount is added to the cost basis of therepurchased stock. In this example the cost basis of the repurchasedstock is increased to $1,000. The holding period for the repurchased lotis also adjusted to the acquisition date of the initial wash sale. See thewash sale in the Schedule of Realized Gains and Losses on page 5 for an

example of how this will be displayed on that section.

Additional Information

For additional information about basis and its use during your tax preparation please refer to the following IRS publications: 2011 Instructions forSchedule D (and Form 8949), IRS Pub. 550 (Investment Income and Expenses) and IRS Pub. 551 (Basis of Assets). You can find these publicationsat irs.gov or by calling the IRS Forms Distribution Center at (800) TAX FORM.


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Your Tax Information Statement begins with a summary of the information we report to the IRS. Certain categories of transactions in this summarymay not pertain to your account. A second summary displays transactions that we do not report to the IRS, but includes information you may findhelpful in preparing your tax returns. Examples of these summaries are illustrated below.

The details of each transaction reported on your Tax Information Statement are displayed after the summaries and are explained in their respectivesections throughout this guide.

INTRODUCING YOUR TAX INFORMATION STATEMENT

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Summary of Original Issue Discount

AmountOriginal Issue Discount (Non-U.S. Treasury Obligations) .............................................................. 531.61Other Periodic Interest ............................................................................................................................800.00Federal Income Tax Withheld .................................................................................0.00Original Issue Discount on U.S. Treasury Obligations ..........................................................................0.00Investment Expenses ...................................................................................................................................0.00

2011 1099-INT Interest Income OMB No. 1545-0112

Box Amount1 Interest Income ...........................................................................................................................4,715.012 Early Withdrawal Penalty. .................................................................................................................0.003 Interest on U.S. Savings Bonds & Treasury Obligations ...................................................7,642.444 Federal Income Tax Withheld ........................................................................0.005 Investment Expenses. ........................................................................................................................0.006 Foreign Tax Paid..................................................................................................................................0.007 Foreign Country or U.S. Possession ................................................................................................ n/a8 Tax-Exempt Interest ....................................................................................................................1,475.009 Specified Private Activity Bond Interest ....................................................................................595.0010 Tax-Exempt Bond CUSI P No. .....................................................................................................Various

2011 1099-DIV Dividends and Distributions OMB No. 1545-0110

Box Amount1a Total Ordinary Dividends ...........................................................................................................1,155.521b Qualified Dividends ........................................................................................................................812.002a Total Capital Gain Distributions .................................................................................................. 625.002b Unrecaptured Section 1250 Gain .................................................................................................175.002c Section 1202 Gain .........................................................................................................................350.002d Collectibles (28%) Gain ....................................................................................................................0.003 Nondividend Distributions ...........................................................................................................116.004 Federal Income Tax Withheld ......................................................................402.145 Investment Expenses ..........................................................................................................................0.006 Foreign Tax Paid .................................................................................................................................34.357 Foreign Country or U.S. Possession...................................................................................................n/a8 Cash Liquidation Distributions ..................................................................................................1,094.009 NonCash Liquidation Distributions ................................................................................................0.00

Summary of Gross Proceeds and Regulated Future Contracts

AmountGross Proceeds (Less Commissions and Fees) ......................................................................21,800.00 *Cost or Other Basis (For Covered Securities Transactions) ....................................................5,800.00 *Federal Income Tax Withheld Gross Proceeds ........................................ 6,104.00*

Wash Sale Loss Disallowed (For Covered Securities Transactions) ........................................200.00 ** Details are reported to the IRS. Refer to the 1099-B section for the details that are reported.Regulated Futures Contracts:Profit or (Loss) Realized in 2011.........................................................................................................841.43Unrealized Profit or (Loss) on Open Contracts 12/31/2010.......................................................141.12Unrealized Profit or (Loss) on Open Contracts 12/31/2011...................................................1,557.00Aggregate Profit or (Loss) .................................................................................................................2,257.13Federal Income Tax Withheld Reg. Futures Contracts ..................................... 0.00

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Summary Of Transactions We Do Not Report To The IRS (See enclosure for additional information)

AmountSchedule of Realized Gains and Losses Total Short-Term Noncovered - Cost or Other Basis ........................................................................................................................................................................................................................................................................................ 3,300.00 Total Long-Term Noncovered - Cost or Other Basis ......................................................................................................................................................................................................................................................................................... 2,400.00 Total Noncovered Cost or Other Basis ................................................................................................................................................................................................................................................ 5,700.00 Total Short-Term Covered - Realized Gain or Loss ........................................................................................................................................................................................................................................................................................... 2,400.00 Total Short-Term Noncovered - Realized Gain or Loss .................................................................................................................................................................................................................................................................................... 2,700.00 Total Long-Term Noncovered - Realized Gain or Loss ...................................................................................................................................................................................................................................................................................... 5,100.00 Total Realized Gain or Loss ................................................................................................................................................................................................................................................................ 10,500.00Municipal Original Issue Discount

Original Issue Discount Subject to Alternative Minimum Tax .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. ...13.75 Original Issue Discount Not Subject to Alternative Minimum Tax .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. .... 240.48 Total Municipal Original Issue Discount ............................................................................................................................................................................................................................3,379.23Non-Reportable Distributions Partnershi p Cash Distribut ions ............ ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. .... 420.00 Investment Expenses, Advisory Fees and Shortfalls ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. ....... 100.00 Return of Principal Distribut ions ............ ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. 300.00 Total Non-Reportable Distributions ...................................................................................................................................................................................................................................... 820.00Equity Options Transactions Cost of Equity Option Purchases ............ ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ........ 12,112.50 Equity Option Proceeds and Expirations ............ ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. .............. ............. ............. ........... 7,588.99Securities Purchased Net Cost of Securities Purchased ................................................................................................................................................................................................................................... 352,329.56

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Sample Summary of Information We Do Not Report to the IRS

Sample Summary of Information We Report to the IRS


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PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS

IRS Form 1099-B, Schedule D (Capital Gains and Losses)

The amounts indicated in this section of your Tax Information Statement reflect proceeds from certain covered and noncovered securities transactionssuch as sales, redemptions, tender offers and maturities. We also report a bonds final principal distribution in this section of the statement.

Your Tax Information Statement reflects gross proceeds, net of transaction costs (for instance, commissions and fees), and does not represent netprofit. Transactions are reported on a trade-date basis and each is reported separately to the IRS. Accordingly, you should report each transactionseparately on your tax return to avoid a mismatch with the IRS.

> TRADE DATE VERSUS SETTLEMENT DATEWe generally report sales of publicly traded securities to the IRS on atrade-date basis on IRS Form 1099-B. Accordingly, you should reporttransactions on a trade-date basis.

Exception:Short sales must be reported during the tax year the salesare closed rather than the year they are opened. Short sales opened in2011 will not be reported until they are closed, unless they are closedby December 31, 2011. For short sales, the date shown is the date thesecurity was delivered to close the short sale.

> HOLDING PERIODReport your capital gains and losses as either short term or long term,depending on how long you held the asset. Assets held for more than oneyear should be reported as long term. The sample tax form on the next

page assumes that some investments were held for the requisite period ofmore than one year to qualify as long term. Your actual holding periodwill vary with respect to each investment.

For covered securities transactions, we will report the type of gain or loss,short term or long term in Box 8Type of Gain or Loss.

> TRANSACTIONS REPORTED ON IRS FORM 1099-B DESCRIBEDBelow are the common transactions that are reported in this section ofyour Tax Information Statement: equity sales, Treasury bill sales, salesof notes and bonds, trust sales, WHFITs, WHMTs, commodity trustproceeds and short sales.

Equity Sales:Proceeds from the sale of equities are reportedon a trade-date basis, net of commissions.

Treasury Bill Sales:To properly report proceeds from the sale of

Treasury bills on your tax return, you should determine which portionof your gain or loss is capital gain or loss, and which portion isordinary income or loss. The discount on Treasury bill maturities isreported in the 1099-INT section of your Tax Information Statementas part of Interest on U.S. Savings Bonds and Treasury Obligations(Box 3). Refer to page 14 for additional information.

Sales of Notes and Bonds:The principal portion of the proceedsfrom the sale of notes and bonds is reported in this section. Accruedinterest received on federally taxable notes and bonds sold betweeninterest payment dates is not included in this section of your TaxInformation Statement, but is reported on a settlement-date basisin the 1099-INT section of your statement, and is identified by asymbol # shown after the amount.

Trust Sales:A trust sale represents the total amount paid to a selling

trust interest holder for the sale of a trust interest and should bereported on Form 8949 and Schedule D of your IRS Form 1040. Thisincludes principal payments that completely retire a debt instrument(other than a final scheduled principal payment) and pro ratapartial principal prepayments. It does not include pro rata sales bynonmortgage widely held fixed investment trusts (NMWHFITs) toeffect redemptions or assets received in any corporate reorganization.

WHFITS:The IRS requires us to provide information regardingincome and expenses attributable to securities deemed to be WHFITsand WHMTs on Form 1099-B. The definition of a WHFIT includesUITs that are treated for tax purposes as grantor trusts and not as aregulated investment company (RIC), royalty trust, mortgage-backedsecurities (MBSs), HOLDRStrust or commodity trust. The definitionof a WHMT includes WHFITs that invest solely in mortgages, regular

interests in REMICs and in other WHMTs or in reasonably requiredreserve funds as measured by value. Proceeds from sales and redemptioof WHFITs are set forth on Form 1099-B. In addition to theinformation reported to the IRS on Form 1099-B, we are also requiredto furnish you with an Additional Written Statement with detailedinformation regarding affected transactions by March 15, 2012.

Commodity Trust Proceeds:Commodity trusts (such as the iSharesCOMEX Gold Trust) are generally classified as grantor trusts for U.S.federal income tax purposes. As a result, the trust itself will not be subjeto U.S. federal income tax. Instead, the trusts income and expenses wilflow through to the shareholders. These trusts typically will sell someof their underlying commodity holdings during the calendar year topay trust expenses, and they will not make any distributions of cash to

shareholders in connection with the sales. At the end of the year, the grproceeds from such sales will be reportable to the shareholders on IRSForm 1099-B and be reportable by the shareholders on Form 8949 (Saand Other Dispositions of Capital Assets) and Schedule D of IRS Form1040 for tax purposes. Shareholders may be able to claim deductions fotheir proportionate amount of trust expenses reported as paid, subject tany applicable limitation.

> REVERSE CONVERTIBLE SECURITIESThe income paid on reverse convertible securities will be split into twocomponents and separately reported as Interest and Option Premium,which is based on the issuers supplemental pricing instructions. Optionpremiums on Form 1099-B for maturities redeemed for cash in 2011 arereported on IRS Form 1099-B. When stock is purchased based upon theexercise of an option, the option premium reduces the cost of the acquire

stock. When stock is sold based upon the assignment of an option, theproceeds of that sale are increased by the option premium and reportedon Form 1099-B for covered securities ONLY. For noncovered securitiesthe proceeds amount is reported on Form 1099-B excluding the optionpremium. Option premiums on reverse convertibles sold in 2011 arereported on IRS Form 1099-B. The interest on reverse convertiblesthat did not mature in 2011 will be reported on IRS Form 1099-INT.However, the option premium for the payment will be reported in thetax year of the maturity.

> SHORT SALES- Short sales must be reported during the tax year the sales are closed

rather than the year they are opened.

- Short sales opened in 2011 will only be reported for that tax year ifthey are closed by December 31, 2011.

- In the event a short sale is partially closed during 2011, Pershing wilonly report information for the portion of the sale that was closed.

- If a short position opened in 2011 is transferred to your account fromanother firm and subsequently closed in 2011, we will report the clositransactions on Form 1099-B if the delivering firm includes both theproceeds and the acquisition date within the transfer statement.

Short Sale Example:

For example, you sold 500 shares of ABC Company in 2011, of whichyou acquired 200 shares in 2011 (closing transaction). Pershing willreport the disposition of the 200 shares on the IRS Form 1099-B underShort-Term Transactions for Which Basis Was Reported to the IRS.


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SAMPLE OF THE TAX INFORMATION STATEMENT

1. Proceeds from broker and barter exchange transactions are reported

on IRS Form 1099-BProceeds from Broker and Barter ExchangeTransactions. These transactions include sales, redemptions, tenderoffers and maturities. Each transaction in this section is reported to

the IRS.

2. Covered transactions will be grouped and sorted by the security

CUSIP

within the following two subsections: Short-Term Transactions for Which Basis Was Reported to the

IRS;Report on Form 8949, Part I, with Box A checked.

Long-Term Transactions for Which Basis Was Reported to theIRS;Report on Form 8949, Part II, with Box A checked.

3. Noncovered transactions will be grouped and sorted by the security

CUSIP within the following subsection:

Transactions for Which Basis Was Not Reported to the IRS;Report on Form 8949 with Box B checked, in either Part I or Part

II as appropriate.

4. Date of Sale or Exchange (Box 1a):The trade date of the sale orexchange is shown. For short sales, the date shown is the date the

security was delivered to close the short sale.

5. Date of Acquisition (Box 1b):This box will be blank for noncoveredsecurities transactions. The word Various will be displayed if the

securities sold were acquired on a variety of dates. For covered short

sales (for tax year 2011 these are short sales opened and closed in 2011)

the date shown is the acquisition date of the security delivered to close

the short sale.

6. Covered or Noncovered (Box 6):If Covered is displayed, thesecurities sold were covered securities transactions and information

may be provided in boxes 1b, 3, 5 and 8. If Noncovered is displayed,

the securities sold were noncovered securities transactions and boxes

1b, 3, 5 and 8 may be blank. Generally, a covered security is a stock

in a corporation acquired and disposed of in 2011.

7. Details regarding each transaction are provided. In accordance

with rules for WHFITs, the form displays items of gross income

and expenses for WHFITs. A trust sale is one transaction type that

would be displayed. A trust sale represents the total amount paid to

selling trust interest holder for the sale of a trust interest and should

be reported on Schedule D of IRS Form 1040. Please refer to note

appearing at the bottom of your IRS Form 1099-B for a description

of each type of transaction.

8. Quantity:The number of shares may be displayed. If fractionalshares are included, the fractional amount will be displayed.

9. Short sales are indicated with the * symbol next to the amount

displayed in the Proceeds (Less Commissions & Fees) (Box 2)column

10.Gross ProceedsLess Commissions and Fees (Box 2): Gross proceefrom transactions involving stocks, bonds and other debt obligations

are reported in Box 2. These amounts do not reflect net profits and

are net of transaction costs (for instance, commissions and fees).

Taxpayers report the gross proceeds from each transaction separately

on IRS Form 8949 (Sales and Other Dispositions of Capital Assets)

and IRS Form 1040, Schedule D (Capital Gains and Losses). This bodoes not include proceeds from regulated futures contracts.

11.Cost or Other Basis (Box 3):The cost or other basis for dispositiontransactions of covered securities is shown. The box will be blank for

noncovered securities transactions. See Form 8949 and Schedule D

(Form 1040) instructions and IRS Pub. 550 (Investment Income and

Expenses) and IRS Pub. 551 (Basis of Assets) for details about basis

12.If proceeds were subject to federal tax withholding, the amount withhe

is reported in the Federal Income Tax Withheld (Box 4) column.

13.Wash Sale Loss Disallowed (Box 5): This amount is the nondeductiblloss in a wash sale transaction for a covered security. This amount is

displayed as a positive amount in this section, as required by the IRS

For details on wash sales, see the Schedule D (Form 1040) instructionand Pub. 550.

14.Type of Gain or Loss (Box 8):The type of gain or loss, short termor long term, for covered securities transactions, is shown. For

noncovered security transactions this will be blank.

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Transactions for Which Basis Was Not Reported to the IRS; Report on Form 8949 with Box B checked, in either Part I or Part II as appropriate.

Description (Box 9):ABC Company CUSIP: 123456ABC

2/15/2011 Noncovered Sale 200 1,800.00 504.00

3/15/2011 Noncovered Sale 400 4,000.00 1,120.00


4/15/2011 Noncovered Sale 800.496 8,000.00 2,240.00

Total Noncovered 13,800.00 3,864.00

Total 21,800.00 5,800.00 6,104.00 200.00

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This is important tax information and is being furnished to the Internal Revenue Service (IRS). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxableand the IRS determines that it has not been reported.


(Box 1a)

Date ofAcquisition

(Box 1b)


(Box 6)DispositionTransact ion Quantity

Gross Proceeds Less Commissions

and Fees(Box 2)

Cost orOther Basis

(Box 3)


(Box 4)


(Box 5)

Type ofGain

or Loss(Box 8)

LossNot

Allowed(Box 15)



3/15/2011 Various Covered Sale 200 2,000.00 2,200.00 560.00 200.00 Short-Term



4/15/2011 Various Covered Sale 400.248 4,000.00 2,600.00 1,120.00 Short-Term

Total Short-Term Covered 8,000.00 5,800.00 2,240.00 200.00

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2011 Form 1099-B PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS OMB No. 1545-0715

(For individuals, report details on Form 8949 and Form 1040, Schedule D, Line 1, 2, 8 or 9.)

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SAMPLESTATEMENT

1

2

4 5 67

8

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1011 12 13

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3


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Report each transaction separately on IRS Form 8949 and Form 1040, Schedule D, as either short term or long term, depending on your holding period. The cobasis information will be provided for covered securities transactions. These transactions should be itemized in Part I of Form 8949 for short-term transactions anin Part II of Form 8949 for long-term transactions. You should determine the cost or other basis for each transaction reflected on Form 8949 and Schedule D froyour records for noncovered transactions. The sample statement below illustrates how this information is reported on your Tax Information Statement, and thesample tax form below illustrates how you should report this information on your tax return.


You would then take the totals at the bottom of the form, which could certainly also include line item amounts from other 1099-B forms, to completeLine 1 of Schedule D of your Form 1040:

SAMPLETAXFORM

SCHEDULE D(Form 1040)

Department of the TreasuryInternal Revenue Service (99)

Capital Gains and Losses

Attach to Form 1040 or Form 1040NR. See Instructions for Schedule D (Form 1040).Use Form 8949 to list your transactions for lines 1, 2, 3, 8, 9, and 10.

OMB No. 1545-0074

2011AttachmentSequence No. 12



( )

Complete Form 8949 before completing line 1, 2, or 3.

This form may be easier to complete if you round off cents towhole dollars.

(e) Sales price from

Form(s) 8949, line 2,

column (e)

(f)Cost or other basisfrom Form(s) 8949,

line 2, column (f)

(g)Adjustments togain or loss from

Form(s) 8949,line 2, column (g)

(h) Gain or (loss)Combine columns (e),

(f), and (g)

1 Short-term totals from all Forms 8949 with box A

checked in Part I . . . . . . . . . . . . .

2 Short-term totals from all Forms 8949 with box B

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8,000 5,600 2,400

IRS Form 8949 and IRS Form 1040, Schedule D

The IRS requires filers of Form 1099-B to sort information within specificcategories to assist you with the preparation of your returns. Your 1099-Brecords will be grouped within three sections:

1. Short-Term Transactions for Which Basis Was Reported to the IRS

2. Long-Term Transactions for Which Basis Was Reported to the IRS

3. Transactions for Which Basis Was Not Reported to the IRS

The IRS introduced a new form for 2011, Form 8949Sales and OtherDispositions of Capital Assets. The new grouping of information on the2011 1099-B form is designed to assist you in completing your 8949 formThe below illustration provides a basic example of how you would use theinformation received on your 2011 Form 1099-B to complete one or moreIRS 8949 forms.

The Form 1099-B example below provides three covered short-term transaction

SAMPLESTATEMENT

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2011 Form 1099-B PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS OMB No. 1545-0715

(For individuals, report details on Form 8949 and Form 1040, Schedule D, Line 1, 2, 8 or 9.)


(Box 1a)

Date ofAcquisition

(Box 1b)


(Box 6)DispositionTransaction Quantity

Gross Proceeds

Less Commissionsand Fees(Box 2)

Cost orOther Basis

(Box 3)


(Box 4)


(Box 5)

Type of

Gainor Loss(Box 8)

Loss

NotAllowed(Box 15)



3/15/2011 Various Covered Sale 200 2,000.00 2,000.00 560.00 Short-Term



4/15/2011 Various Covered Sale 400.248 4,000.00 2,600.00 1,120.00 Short-Term

Total Short-Term Covered 8,000.00 5,600.00 2,240.00

. .

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. . .

This is important tax information and is being furnished to the Internal Revenue Service (IRS). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxableand the IRS determines that it has not been reported.

SAMPLETAXFORM

Form 8949Department of the TreasuryInternal Revenue Service (99)

Sales and Other Dispositions of Capital AssetsSee Instructions for Schedule D (Form 1040).

For more information about Form 8949, see www.irs.gov/form8949Attach to Schedule D to list your transactions for lines 1, 2, 3, 8, 9, and 10.

OMB No. 1545-0074

2011AttachmentSequence No. 12A



Note: You must check one of the boxes below. Complete aseparate Form 8949, page 1, for each box that is checked.

*Caution.Do not complete column (b) or (g) until you have read the instructions for those columns (see the Instructions for ScheduleD (Form 1040)). Columns (b) and (g) do not apply for most transactions and should generally be left blank.

(A)Short-term transactions reported on

Form 1099-B with basis reported to the IRS

(B)Short-term transactions reported on Form

1099-B but basis not reported to the IRS

(C)Short-term transactions for which

you cannot check box A or B

1

(a)

Description of property

(Example: 100 sh. XYZ Co.)

(b)

Code, if any,for column (g)*

(c)

Dateacquired

(Mo., day, yr.)

(d)

Date sold

(Mo., day, yr.)

(e)

Sales price

(see instructions)

(f)

Cost or other basis

(see instructions)

(g)

Adjustments to

gain or loss, if any*

200 sh. ABC Company Various 03-15-2011 2,000 2,000100 sh. ABC Company 01/15/2011 12-15-2011 2,000 1,000400.248 sh. DEF Company Various 04-15-2011 4,000 2,600

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: . .

, ,

., , .

., , .

,

2 Totals. Add the amounts in columns (e) and (f). Also, combine the

amounts in column (g). Enter here and include on Schedule D, line 1(if

box Aabove is checked), line 2(if box Babove is checked), or line 3(if

box Cabove is checked). . . . . . . . . . . . . . . 2

For Paperwork Reduction Act Notice, see your tax return instructions.Cat. No. 37768Z

Form 8949

8,000 5,600

X


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1

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Date ofAcquisition


GrossProceeds

Cost orOther Basis



DispositionMethod


Description :ABC Compa ny CUSIP: 123456ABC3/15/2011 01/15/2011 Sale 100 1,000.00 1,200.00 (200.00)3 0.00 FI

02/15/2011 Sale 100 1,000.00 1,000.00 0.00 FI

200 2,000.00 2,200.00 (200.00) 0.00

12/15/2011 04/15/2011 Sale 100 2,000.00 1,000.00 1,000.00 FI Wash sale: 59 days added to holding period


04/15/2011 01/15/2011 Sale 200.124 2,000.00 1,000.00 1,000.00 FI

Gift Fair Market Value: 1,400.00

02/15/2011 Sale 200.124 2,000.00 1,600.00 400.00 FI

400.248 4,000.00 2,600.00 1,400.00



Description :ABC Company CUSIP: 123456ABC03/15/2011 11/15/2010 Sale 100 1,000.00 500.00 500.00 FI


200 2,000.00 1,100.00 900.00


04/15/2011 11/15/2010 Sale 200.124 2,000.00 1,000.00 1,000.00 FI

12/15/2010 Sale 200.124 2,000.00 1,200.00 800.00

400.248 4,000.00 2,200.00 1,800.00


Total Short-Term 14,000.00 9,100.00 (200.00) 5,100.00


Schedule of Realized Gains and Losses

1. The Schedule of Realized Gains and Losses section is provided onall Tax and Year-End Statements (TYES). If your financial firm

enrolled in the service, you will receive this premium tax statement.

The information in the schedule is not reported to the IRS, but it does

contain detail and summary information that is used as the basis of

reporting transactions on Form 1099-B.2. Covered transactions will be grouped and sorted by the security

CUSIP within the following subsections:

Short-Term Transactions for Which Basis Was Reported to theIRS (Covered)

Long-Term Transactions for Which Basis Was Reported to theIRS (Covered)

The covered sections will contain lot details and summary totals. The

summary totals for these transaction types for a security will also be

displayed in the corresponding section of the 1099-B form of the TYES.

3. Noncovered transactions will be grouped and sorted by the security

CUSIP within the following subsections:

Short-Term Transactions for Which Basis Was Not Reported to theIRS (Noncovered)

Long-Term Transactions for Which Basis Was Not Reported to theIRS (Noncovered)

The noncovered sections will also contain lot detail and summary

totals, but only the proceed amounts will be summarized in the

Transactions for Which Basis Was Not Reported section of the

1099-B form. The schedule thus provides valuable cost basis data

and holding period information to assist with tax preparation.

4. The Cost or Other Basiscolumn will display the cost or other basisat the lot level for a disposition transaction.

5. If a wash sale occurs, aWash Sale Loss Disallowedamount may bedisplayed in this column. This amount is a negative amount (displaye

in parentheses) in this section, which is consistent with how the amou

is displayed in the Schedule of Realized Gains and Losses on yourbrokerage account statements. The number of days added to a lot

holding period as a result of a wash sale will be displayed under the

Date of Acquisition for the lot (as shown in the sample).

6. Realized Gain or Lossamounts are provided at the lot level.Note that the IRS does not require the reporting of this information

on the 2011 Form 1099-B.

7. The Disposition Methodused for the selection of the lot will bedisplayed as, for example, FI for a First-in, First-out (FIFO)

selection method. A key will be provided after the section for the

types of disposition methods listed for the details in the schedule.

8. For Inherited/Gifted Securitiesthe original cost basis and gift fairmarket value may be displayed.

9. A transaction may be split among multiple sections. The sample

statement below displays an example of this. In the sample a sale of

400 shares of ABC Company occurred on March 15, 2011. Of the

400 shares sold, 200 were acquired in 2011 and are displayed in the

Short-Term covered section. The other 200 shares included in the sale

were purchased prior to 2011 and are displayed in the Short-Term

noncovered section.

SAMP

LESTATEMENT

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2

4 5 6 7

8

3

9

9


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REGULATED FUTURES CONTRACTS

IRS Form 1099-B and IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles)

We report information related to your regulated futures contracts in this section of your Tax Information Statement. While it is only necessary foryou to report the aggregate profit or loss from regulated futures contracts, we are required to report aggregate profit or loss and its three componentsas follows:

A. PROFIT OR (LOSS) REALIZED IN 2011 This amount indicates the profit (or loss) realized from regulated futures

contract transactions closed during 2011 (see Box 10 below).

B. UNREALIZED PROFIT OR (LOSS) ON OPEN

CONTRACTS12/31/2010 This amount was previously reported to you on your 2010 Tax

Information Statement, as the contracts were marked to their marketvalue at the end of 2010. It is reported here as an adjustment to your2011 aggregate profit (or loss), since it should have been included inyour income for 2010 (see Box 11 below).

C. UNREALIZED PROFIT OR (LOSS) ON OPEN

CONTRACTS12/31/2011 This amount indicates unrealized profit (or loss) on open contracts

as of December 31, 2011, based on their market value at the endof the year (see Box 12 below).

D. AGGREGATE PROFIT OR (LOSS)This is a summary of your regulated futures contracts activity.

Aggregate profit (or loss) is calculated here (see Box 13 below).

Sample Calculation of Aggregate Profit (or Loss)

Aggregate profit (or loss) can be calculated based upon information in

your Tax Information Statement as follows:

A B + C = D

($421.38) $141.12 + ($1,000.00) = ($1,562.50)

Report total aggregate profit (or loss) on IRS Form 6781, line 1. Transfer the

totals from IRS Form 6781 to IRS Form 1040, Schedule D, according to the

instructions for IRS Form 1040.

SAMPLEST

ATEMENT

SAMPLETAXFORM

Report Aggregate Profit or (Loss) on IRS Form 6781 as shown below.

Form6781Department of the TreasuryInternal Revenue Service

Gains and Losses From Section 1256

Contracts and Straddles

Attach to your tax return.

OMB No. 1545-0644

2011Attachment

Sequence No. 82Name(s) shown on tax return Identifying number

Check all applicable boxes (see instructions). A Mixed straddle election

B Straddle-by-straddle identification election

C Mixed straddle account election

D Net section 1256 contracts loss election

Part I Section 1256 Contracts Marked to Market

(a) Identification of account (b) (Loss) (c) Gain

1 Form 1099-B, Pershing LLC, 13-2741729 (1,562 50)

A

B

C

D

Box 10

Box 11

Box 12


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IRS Form 1099-INT, Schedule B (Interest and Ordinary Dividends)

The amounts reported in this section of your Tax Information Statement reflect interest income credited to your account during 2011. The summary sectionof your Tax Information Statement reflects four totals for interest income: Interest Income, Interest on U.S. Savings Bonds and Treasury Obligations,Tax-Exempt Interest and Specified Private Activity Bond Interest. We report each of these totals separately to the IRS. Accordingly, you should report eachtotal separately on your tax return. We report details of these totals in the Interest Income section of your Tax Information Statement as described below.

INTEREST INCOME

A. INTEREST INCOME (BOX 1)

Interest income reported in this column was paid by corporations(U.S. and foreign) and U.S. government agencies, and may includeinterest on your credit balance. Total interest income reported inthis column is also reported in the summary section of your TaxInformation Statement as Interest Income. You should report this totalon IRS Form 1040, Schedule B, line 1, as indicated on the next page.The various classifications of the interest income are reportedto you in the CUSIP/Security Type column as described below.

U.S. Corporations:This includes interest from certain U.S. corporatebonds, taxable municipal bonds and certain collateralized debtobligations (CDOs) issued without original issue discount (OID).

Also included is the total credit interest earned on cash balances inyour account.

Foreign Corporations:This includes interest from bonds issued byforeign entities. We furnish this information as a separate category toenable you to determine your ability to deduct or claim a credit forforeign taxes paid. Refer to the Foreign Tax Paid section on page 29for additional information.

U.S. Government Agencies: This includes interest fromgovernment agencies, such as the Federal National Mortgage

Association (FNMA) and the Government National MortgageAssociation (GNMA).

B. INTEREST ON U.S. SAVINGS BONDS AND TREASURYOBLIGATIONS (BOX 3)Interest income reported in this column was paid on U.S. Treasury

notes, bonds and bills. This interest income is not included in InterestIncome (Box 1), Tax-Exempt Interest (Box 8) or Specified PrivateActivity Bond Interest (Box 9). Total Interest on U.S. Savings Bondsand Treasury Obligations (Box 3) is also reported in the summarysection of your Tax Information Statement. You should report totalinterest on U.S. savings bonds and Treasury obligations on IRS Form1040, Schedule B, line 1, as indicated on the next page. Please notethe following information concerning U.S. Treasury bills:

Cost Basis in Our Files:When we have the cost of a Treasury billon file, we report the actual Treasury bill discount for bills maturingduring 2011. To assist you in reviewing our calculations, your TaxInformation Statement displays the purchase price and quantitybeneath the description of each Treasury bill. Generally, no

adjustment is necessary when we report the actual Treasury billdiscount. However, if you owned multiple lots of the sameTreasury bill issue and those lots were purchased on different datesand at different prices, and you disposed a portion of the bills beforematurity, we used the FIFO method to calculate the discountshown on the statement. If you elect to use the specific identificationmethod, you may need to adjust the amount reported beforeentering it on your tax return.

Cost Basis Not in Our Files:If you did not purchase the Treasurybill through our firm, your Tax Information Statement may notreflect the original cost of your bills. Your statement will specifyIRS Publication 1212, indicating that we are using an estimatebased on rates published by the IRS. If this is indicated, you should

adjust your estimated Treasury bill interest income to the actual

amount. To make this adjustment, first compute the actual discouearned by subtracting the original cost of the Treasury bill from itsmaturity value. Compare this result to the amount on your TaxInformation Statement, and adjust IRS Form 1040, Schedule B,line 1, described below.

Sample Calculation of a Treasury Bill Discount

In the calculation below, assume you purchased a Treasury bill for

$9,500 and it matured at $10,000. If we reported Treasury bill interest

income on your statement ($982.70 in the example illustrated on the

next page), based on rates in IRS Publication 1212, you should make

the following adjustment to IRS Form 1040, Schedule B:

Maturity value $10,000.00

Less: cost (9,500.00)

Actual discount (interest) $500.00 $500.00

Less: amount per statement (982.70)

Negative adjustment to the reported amount $(482.70)

Report the total interest on U.S. savings bonds and Treasury

obligations on your statement on IRS Form 1040, Schedule B, line 1

($7,178.24, which includes the $982.70 income in this example and as

illustrated on the next page). Then, a few lines below that, report the

adjustment on Schedule B, as well ($482.70 in this calculation, also

illustrated on the next page). This adjustment, which may be negative

or positive, should be labeled OID adjustment.

1

C. INVESTMENT EXPENSES (BOX 5)The amount reported in this column represents your share of investmenexpenses of a single-class REMIC. Your share of UIT, WHFIT and

WHMT expenses are also reported in Box 5. If you file IRS Form 104you may deduct these expenses on IRS Form 1040, Schedule A, line 23subject to the 2% limit. This amount is included in Box 1.

D. FOREIGN TAX PAID (BOX 6)This amount represents taxes paid to foreign governments on interest fromforeign sources. You may choose to claim these taxes as a credit or as anitemized deduction on your federal income tax return. Refer to the ForeigTax Paid section on page 23 of this guide for additional information.

E. TAX-EXEMPT INTEREST (BOX 8)Interest income reported in this column represents interest paid on

bonds issued by a state, the District of Columbia, a U.S. possession,an Indian tribal government or a political subdivision. It also includesany accrued interest on these bonds sold between interest dates and anexempt-interest dividends from a mutual fund or RIC. Total interestincome reported in this column is also reported in the Summary sectiof your Tax Information Statement as Tax-Exempt Interest Income. Yshould report this total on IRS Form 1040, line 8b.

F. SPECIFIED PRIVATE ACTIVITY BOND INTEREST (BOX 9Interest income reported in this column was paid from specified privateactivity bonds. This includes exempt interest dividends paid by a mutuafund or RIC on specified private activity bonds. This interest is subjectalternative minimum tax (AMT) and is included in Tax-Exempt Interes(Box 8). Total interest income reported in this column is also reported


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in the Summary section of your Tax Information Statement as specifiedprivate activity bond interest. You may be required to report this total onIRS Form 6251, Alternative Minimum TaxIndividuals.

> ACCRUED INTEREST RECEIVED/PURCHASEDAccrued interest received on notes and bonds sold between interestpayment dates is included in the 1099-INT section of your Tax

Information Statement on a settlement-date basis when it is creditedto your account. If you received accrued interest, the amount will beidentified by a symbol #. Refer to page 26 of this guide for additionalinformation on accrued interest purchased.

> UITS AND OTHER WHFITs OR WHMTsInterest income earned by certain UITs is also reported in theIRS Form 1099-INT section. If your UIT is organized as a grantortrust (WHFITs or WHMTs) and earned interest income, your shareof the UITs interest income is reported in this section. See the SpecMessage for Owners of Mutual Funds, UITs, WHFITs, WHMTs anREITs on page 16 for more information.

INTEREST INCOME

Report total Interest Income (Box 1) on IRS Form 1040, Schedule B, Part 1, line 1. Report total Interest on U.S. Savings Bonds and TreasuryObligations (Box 3) separately on IRS Form 1040, Schedule B, Part 1, line 1. Report total Tax-Exempt Interest (Box 8) on IRS Form 1040, line 8b.For Specified Private Activity Bond interest, see Instructions to IRS Form 6251.

SAMPLETAXFORM

SAMPLESTATEMENT

Pershing LLC, 13-2741729 7,178 . 24Pershing LLC, 13-2741729 4,715 . 01Less: OID Adjustment (482 . 70)

2

A DCB

1

SCHEDULE B(Form 1040A or 1040)

2011Interest and Ordinary Dividends

Department of the TreasuryInternal Revenue Service (99)

Attach to Form 1040A or 1040. See instructions on back.

OMB No. 1545-0074

AttachmentSequence No. 08


Part I

Interest

(See instructionson back and theinstructions forForm 1040A, orForm 1040,line 8a.)

i

1 List name of payer. If any interest is from a seller-financed mortgage and thebuyer used the property as a personal residence, see instructions on back and listthis interest first. Also, show that buyers social security number and address

Amount


16/4016

Frequently Asked Questions: Interest Income

CDOsQ. Why are interest payments on my CDOs missing from my Tax

Information Statement?

A. Tax information for certain CDOs (including REMICs and WHMTs)is not available from the issuers until after the February statementmailing. All taxpayers that held CDOs during 2011 will receive a revised

statement that includes interest income and OID earned on the CDO.The revised statement will be mailed by March 15, 2012. Also, interestincome on a REMIC is reportable by us on an accrual basis, not on acash basis. Refer to page 32 of this guide for additional information.

TREASURY BILLSQ. I purchased a Treasury bill through my former broker-dealer and

redeemed it through you. As a result, the interest income reported onthe statement is incorrect. How do I report this on my tax return?

A. If you purchased a Treasury bill through your former broker-dealer, wemay not have your purchase price information in our records. Whenthis situation occurs, we report interest income to you by following theguidelines in IRS Publication 1212. You should calculate your actual

interest income as the difference between your purchase price and thebills redemption amount. Report the amount from your Tax InformationStatement on IRS Form 1040, Schedule B, line 1. Then, adjust thisamount by the difference between your actual interest income and theamount reported on your statement. Report this adjustment separately

on Schedule B, line 1, and label it OID Adjustment.

ERRONEOUS INTEREST PAYMENTQ. I received an interest payment from the paying agent that was

incorrect. It was not mine, and I returned the money to you. However,the paying agent still sent an IRS Form 1099-INT to me and will notcorrect the information. How do I report this on my tax return?

A. To avoid a mismatch with the IRS, this transaction should be reported twiceon IRS Form 1040, Schedule B. First, report the amount from the payingagents IRS Form 1099-INT on Schedule B, line 1. Additionally, report theamount you paid to us as a negative adjustment on Schedule B, line 1. Titlethis negative adjustment Nominee Distribution. Refer to the NomineeRecipients section on page 8 of this guide for additional information.

INTEREST INCOME

Special Message for Owners of Mutual Funds, UITs, WHFITs, WHMTs and REITs

If you held one or more of these investments, we may send you a revised Tax Information Statement if we did not receive reallocation information

by February 4, 2012. Some issuers may not make their final distribution information available until after January. When we have not received the

distribution information from the issuer, we have denoted the income with a symbol (**) on your Tax Information Statement. Income and interest

declared on these investments in October, November or December of 2011 is considered received on December 31, 2011, even if the income or

interest 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)

of 2012. Accordingly, these amounts are reported on your 2011 IRS Form 1099. UIT revisions will be mailed by March 15, 2012. Supplementalinformation 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, 2012, via a link at mytaxhandbook.com.


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IRS Form 1099-DIV (Dividends and Distributions)

Dividends and other distributions from corporations, mutual funds, UITs, WHFITs and REITs are reported in this section of your Tax InformationStatement. Income derived from money market funds will also be reported in this section. You will receive a separate IRS Form 1099-DIV directlyfrom a money market fund if we did not handle the processing of your funds for the entire year.

DIVIDENDS AND DISTRIBUTIONS

A. TOTAL ORDINARY DIVIDENDS (BOX 1a)

Ordinary dividends, which include any net short-term capital gains froma mutual fund are fully taxable. Ordinary dividends paid by corporations,mutual funds, and certain UITs and WHFITs are included in this sectionof your Tax Information Statement. Subtotals for U.S. and foreign-source ordinary dividends are included at the end of this section. Formutual funds and UITs, foreign income includes any distribution thatis comprised in whole or in part of foreign-source ordinary dividends.Report total ordinary dividends on IRS Form 1040, line 9a, or IRSForm 1040A. Also report it on IRS Form 1040, Schedule B (Interestand Ordinary Dividends), line 5, if required. See the instructions for IRSForm 1040, Schedule B, to determine if you are required to completeSchedule B to report your dividends.

B. QUALIFIED DIVIDENDS (BOX 1b)The portion of your dividends that is eligible for the 15% or 0%capital gain rate is reported as Qualified Dividends in Box 1b in thissection of your Tax Information Statement. You should report theeligible amount on IRS Form 1040, line 9b. If you have qualifieddividends, you must figure your tax by completing the QualifiedDividends and Capital Gains Tax Worksheet on IRS Form 1040 or1040A instructions, or the Schedule D Tax Worksheet in the ScheduleD instructions, whichever applies.

Exception:Some dividends that we report as Qualified Dividendsin Box 1b may not be Qualified Dividends depending on yourcircumstances, including those described below.

You must hold the stock or mutual fund shares for the minimumnumber of days or the

2011taxguide (page 26 - oid adjust)

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