A Covered Security refers to any investment security owned by a U.S. person for which a broker is required to report its cost basis to both the client and the Internal Revenue Service. Reporting is made via the Form 1099-B which is issued annually.
Covered securities include:
- Any stock in a corporation that was acquired on or after January 1, 2011
- Any mutual fund shares that was acquired on or after January 1, 2012
- Stock in a corporation that was purchased through a dividend reinvestment plan acquired on or after January 1, 2012, and
- Notes, bonds, and commodities, as well as derivatives or contracts based on commodities, that were acquired on or after January 1, 2013
Non-covered securities are those that were acquired prior to these dates.
IBKR also offers tax-advantaged account types for clients who are U.S. citizen, such as IRA accounts. Please click here to learn more about these account offerings.