RECO Mk JAN 0 8 2013 Morgan Securities Important Information Regarding Form 1099 Tax Reporting Changes for 2012 YOUR 1099 FORMS WILL BE POSTMARKED ON OR ABOUT FEBRUARY 15, 2013 As the result of legislation enacted by the D.S. Congress. as part of their annual tax reporting process. brokers are required to report cost basis information to the Internal Revenue Service (IRS) beginning with tax year 2011. The cost basis reporting law is phased in over multiple years. Generally, brokers are required to report cost basis on securities that are purchased on or after the below effective dates: ► January 1, 2011 - stock in a corporation: ► January 1.2012 - certain mutual funds and similar securities that are classified as Regulated Investment Companies ("Ks") and shares purchased or acquired in connection with qualified dividend reinvestment plans; and ► January 1.2014 - certain options and debt securities Generally, securities that are purchased or acquired after the effective date are considered "covered" securities and are subject to cost basis reporting. The broker is required to report cost basis information to you and the IRS. Information reported on the Form 1099-B to you and the IRS includes: ► Gross proceeds, the cost basis, and holding period for covered securities ► Any wash sale adjustments required for reporting by the new law. A "wash sale" deferral and adjustment generally results when a taxpayer sells a security at a loss and reacquires the identical security in the same account within 30 days of the loss. The broker is required to adjust the basis and holding period of the reacquired security for the wash sale deferral. ► Date of sale or exchange and date of acquisition Securities that are purchased before the effective dates are generally considered "noncovered" securities. Tor the sale or exchange of noncovered securities, brokers are not required to report cost basis information to you or the IRS. Instead. the broker is only required to report gross proceeds and related information and is similar to reporting prior to January I, 2011. What's new on Form 1099-B for 2012: Short Sales The IRS instituted the below changes in regards to short sale reporting, which have been incorporated into Form 1099-B: ► Box la: Date the security was delivered to close the short sale (settlement date of closing transaction). ► Box Ib: Acquisition date of the security delivered to close the short sale (trade date of closing transaction). ► Box Ic: Whether any gain or loss on the closing of the short sale is short-term or long-term based on the acquisition date of the security delivered to close the short sale. Regulatory ► As of January I. 2012, shares in Regulated Investment Companies and certain dividend reinvestment plans are deemed "covered" securities and subject to cost basis reporting ► New boxes have been added to Form 1099-13 for stock or other symbol (box Id). quantity (box le). and whether basis is being reported to the IRS (box 6b). Other boxes on the form have been moved or renumbered. PREVIEW OF 2012 FORM 1099-B ENHANCEMENTS Summary Totals ► New table of summary totals added at the beginning of the form' ► Layout updated to include details that can be used to complete 89492 Proceeds Cost Realized Gain and Loss Wash Sale loss Disallowed TaW Noucoveed Traction Proceeds Si 26,132 95 Form 8949, Pan I (Short Term) TO Covered Brat Tern eau / Loss (Cost Bass Reported to IRS: Box A Cireckedi Tote Nevi:Aired Star Tenn Gan r Loss (Cost Bass NOT Reported o IRS; Box B Cmctet) 56S6,625.0) 5423,25000 5665555.0) 5423,762 0) (5330.00) (5512.0)) 54.3750) Form 8949, Part II (Long Term) Tortt Covrei Loop Tern Gar I Loss (Cost Bass Rtdriodd %a IRS. Bo( A CrecTed) Tod Norcoveed Lon Tem Or/ Loss (Cost Bass NOT Repred to IRS, Box 8 C•eckea) 5276 600 0) 5405,45080 561445.50 5293,55).0) 5'7.M4 50 5'350)0) 54 2)0 0) ' Total WO. Realiied Gain (lois/. and holding period information may not (Oleo all adjustments necessary for tax reporting purposes. Taxpayers are ultimately responsible lot the accuracy 01 their tax returns and should verily such inlormation against their own records when calculating reportable gain or loss resulting Iron a sale. redemption. or exchange. ?Please consult your tax advisor (or details on how to complete Form 8949. EFTA01221804 Noncovered Cost Basis Sections3 ► New Short Term and Long Term noncovered sections added ► Cost basis provided for noncovered securities - .IPMCC does not report such information to the IRS Example Form 1099-B Short Term Noncovered Section ACTIONS OMB NO.1545.0715) Noncovered Short Term Gain or Loss - Cost Basis NOT reported to IRS Box 6a: Noncovered Repo' ( on Form (Boa la) Dale of Sale or Exchange Security Box 6b: Box Ic: 8949, Part I, with Box B checked Max lb) Box al • Dale of Acquisition Boynton Type of Gain (Box teb S)oboi or Loss: (Box lei Short Term Box 2a) Gross Proceeds Len C00111115,100 and Option Premium Mos 3) • C011 or Mier Bab (BOX 5) • Wash Sale Lon Disallowed Moe 4) federal Income Tat Withheld (Box Xs) Loss Nol Alloaed • REALIZED GAINS LOSS CUSiP Cluartly 3:1700(2 9192011 PLICO TOTAL RETIO.'i PC" 3:t."; 755(0 8,250(0 7,750.00 SCOW US USTED 9162512 8/90011 PACO TOTAL RETURN FN)A3Ver %Noce 11,050(0 11,250.00 í250,C0) U5 USTED 9112012 94(2011 5MR SW 5(0 ET( SER I 1,50300 2C4,053.00 207,2X CO (3,250.00) SHORT SALE Example Form 1099-B Long Term Noncovered Section Noncovered Long Term Gain or Loss - Cost Basis NOT reported to IRS Box 6a: Noncovered Security Box 6b: Report on Form 8949, Part II, with Box B checked Box lc: Type of Gain or Loss: Long Term Box (a) (Box lb) (Box 8) (Box id) (Box le) (Box 74 (Doi 7) Mo. I) lBox 4) (Box lel Symbol Gross Proceed‚ Len • Wash Sale Federal Date of Sale or • Dakar Commission and 'Color Loos Income Tax Loss Not • PSAL1110 Exchange Acquisition Description CUSP Quantity Option Premium Cu Bab Oisallomd Wahhcld Aliened GAIN I LOSS 3/17/N12 0002/10 JOHNSON S JCUNSON 75005 51,750,05 E 49,50 CO 2.250.00 101310012 SA0010 SPOR GOLD SHARES X0.03 SS,SCO.00 61,503.03 LOCO CO 12,803.00) 114/2012 S Etmar2(.09 SPOR 50503 ETF KR I 1,003.03 136,0:000 (22,003.03 1 14p00.03 'Noncovered cost basis information that is not reported to the IRS should be verified against your records when calculating reportable gain or loss resulting from a sale. redemption. or exchange. EFTA01221805 New Indicators and Columns ► New indicators added to the form, e.g. wash sales ► Format enhanced with the addition of a "Realized Gain/Loss" column Example Form 1099-B Short Term Covered Section : CHANGE TRANSACTIONS (OMB NO. 1545.0715) Covered Short Term Gain or Loss - Cost Basis Reported to IRS Box 6a: Box 6b: Basis Reported to IRS Box It: Type of Gain or Loss: Short Term Report on Form 8949, Part I, with Box A checked (Box la) (Box lb) Dale of Sate or Exchange Dale of Acquisition Ifin 1) (Box Id) !Box le) On 14) Signhol Gr033 PIOCUOS Lon Commission and Description CUSP Ouantik Option Premium Si2D2412 iciii9cni APPLE NC 8:299012 11/11/2011 AT&T NC 12.160012 90140012 AT&T NC 3:0 00 Wini 31 an 5) Wash Sale IBM federal Box 10) Con or loss Income fax loaf Hol • REALIZED Other anis Ibulloaed Withheld Ancreetd GAIN / (OSS 14,5(0 C0 183,3(0 CO 2:000 12,:e CO 2,5030) 93,625.00 95,070.93 4.3/5.0) 83IS 03} 3,033.(0 114,00000 109,37503 El 1,625E0 Example Form 1099-B Long Term Covered Section Covered Long Term Gain or Loss - Cost Basis Reported to IRS Box 6a: Box 6b: Basis Reported to IRS Report on Form 8949, Part II, with Box A checked Box IC: Type of Gain or loss: I (m leun (Box la) 'Box lb) Sox (Box Id) (Box It) iflos 23) (Box I) Box S) IBox 1) Box ?b) Symbol ( Gross Proceeds Los Wash Sale federal Diked Selene Dak of Commission and Cow or Loss Ineonie lax Loss Hol Exchaar Acquisitive Deuription CUSP Quantity Onion Premium Other Bask withheld 10602012 104000 PITNEY wiritS 11(210012 40(2011 VERIZCO1 COW NC 1020012 1/5/2011 IADYORCIA 50WEIEWS NC 7,50300 ::5.303 03 97,750.(0 450 00 107,10000 97,035 50 1,10003 1430000 63,6C0 CO 4,8000 ( REAL I/10 (GAIN LOSS lop01.50 0.20108 IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (Including any attachments) is not intended or written to be used, and cannot be used. in connection with the promotion, marketing or recommendation by anyone unaffiliated with 1Pktorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. EFTA01221806