IRS Proposes Regulations on Basis Reporting, Draft of New Form

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IRS proposes highly anticipated regulations (REG-101896-09) under a 2008 law that will require the reporting of basis and other information by mutual fund companies and stock brokers for most stock purchased in 2011 and all stock purchased in 2012 and later years. The law now requires brokers to include a customer's adjusted basis in sold securities when reporting the sale of securities to IRS, and to classify any gain or loss as long-term or short-term, IRS says. The guidance contains proposed regulations for a number of issues, such as changes to the law that modify how taxpayers calculate basis when averaging the basis of shares acquired at different prices and that expand the ability of taxpayers to calculate basis by averaging. IRS also issues a draft version of the 2011 Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.