A BNY MELLON COMPANY

Accounts & Services

Average Cost Accounting Statement FAQs

Q. What types of transactions are reported on my 2011 Average Cost Accounting Statement?

A. Redemption transactions from a fund that has a fluctuating net asset value (price) are reported on this Statement. Redemption transactions include exchanges, redemption checks written, teletransfer redemptions and wire redemptions.

Q. During 2011, I sold fund shares inherited from my parents. Will cost basis and gain/loss information from this sale be shown on my 2011 Average Cost Accounting Statement?

A. No. You will not receive an Average Cost Accounting Statement for that account. Basis information on shares received by gift or inheritance is not available systematically, so gain/loss cannot be accurately calculated.

Q. Will my capital gain/loss reported on the 2011 Average Cost Accounting Statement be the same on my state and local personal income tax return as it is on my federal personal income tax return?

A. State and local calculations of capital gain (loss) are usually the same as the federal calculation. However, your state or locality may have special rules that result in a different amount or treatment of gains or losses. To determine whether an adjustment is necessary, please read your state and local personal income tax form instructions or consult your tax advisor.

Q. One of the transactions on my 2011 Average Cost Accounting Statement contains a footnote stating it is "subject to the wash sale rules." What is a wash sale and how does it affect the cost basis information contained on the statement?

A. A wash sale occurs if you sell your fund shares at a loss, and 30 days before or after that sale, you purchase additional shares in the same fund. Purchases include any dividend reinvestments. If a footnote to the transaction states it is subject to wash sale rules, the IRS requires that all or a portion of that loss be deferred. Therefore, the Statement will show a reduced loss or no loss for that transaction. Instead, the deferred loss is added to the average cost of the remaining fund shares in the account and will be reflected in the gain (loss) when these shares are sold. For the proper method to report wash sales on Form 1040, Schedule D, please see the IRS instructions for Schedule D.

Q. Can a purchase of fund shares during the first 30 days of January 2012 create a wash sale that will affect 2011 cost basis reporting?

A. Yes. Some or all of a loss realized on fund shares sold during the last 30 days of 2011 could be subject to the wash sale deferral rules if shares in the same fund are repurchased during the first 30 days of January 2012. If that occurs, a "revised" Average Cost Accounting Statement will be mailed to you in 2012.

Q. How do I enter cost basis information on my Form 1040, Schedule D?

A. There are changes to the schedules for 2011. It is recommended that you consult your tax advisor on how to report cost basis information on your federal personal income tax return.