Harbor Funds | Frequently Asked Questions - Understanding Form 1099-B

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Understanding Form 1099-B
Why were my Forms 1099-B and 1099-DIV combined into one tax statement? Show
Forms 1099-B and 1099-DIV were combined to enhance simplicity, reduce mailing costs and improve ease of use.
If federal tax was withheld on my redemption, will it appear on Form 1099-B? Show
Yes, the amount withheld for income tax will appear in Box 4 of the form.
Why doesn't my Form 1099-B have all of the boxes that the standard IRS Form 1099-B has? Show
Harbor Funds utilizes a customized Form 1099-B which includes only those boxes that are required to be reported.
When will I receive Form 1099-B? Show
Form 1099-B for Harbor Funds is generally mailed the third week of January.
Why did I receive Form 1099-B when I exchanged between funds in my account? Show
For tax purposes, the IRS considers an exchange of shares to be a redemption of one fund and a purchase of another fund. As a result, you will recognize a capital gain or loss on the shares that you exchanged and therefore redemptions are reported to you on Form 1099-B. Exchanges within an IRA are not reportable. Exchanges between share classes in the same fund are not considered redemptions and are not taxable.
Why aren't redemptions or exchanges from money market funds reported? Show
Because the Net Asset Value (NAV) of a money market fund generally does not fluctuate from $1.00 per share, therefore, there is no gain or loss to report.
When will I receive my cost basis statement? Show
Yes, cost basis statements will be included with the 1099-Div/B Forms this year. 1099-DIV/B Forms are generally mailed by mid-February.
Does Form 1099-B report my gains or losses? Show
This form is not an indication of gains or losses in your fund account. Cost basis must be calculated in order to determine gains or losses. Harbor Funds provides a cost basis statement to shareholders unless:
  • You are invested in the Money Market Fund.
  • Your account was opened before December 1, 1995.
  • Your account had shares transferred in from another Harbor Funds account within the same fund and the originating account is closed.
  • The account is tax exempt.
What is a capital loss carryforward and how does it affect me? Show
A capital loss carryforward occurs when a fund has realized losses in excess of realized gains on investments and must carry the loss forward to future tax years. Under the Internal Revenue Code, a capital loss carryforward can be used by the fund to offset future net realized gains. Historically, capital loss carryforwards carried forward as short term losses and expired after 8 years if not used completely. With the passage of the Regulated Investment Company Modernization Act of 2010, capital loss carryforwards (generated after taxable years beginning after December 22, 2010) never expire and carry forward as short term or long term capital losses. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in the pre-enactment taxable years, which carry an expiration date. For individual investors, a capital loss can be carried forward until it is used. It does not expire. See Publication 550 for more information on Capital Losses.

Harbor Funds had several funds with capital loss carryforwards in 2011. The application of these capital loss carryforwards to each fund's net realized gain, if any, resulted in reduced taxable distributions to shareholders. In 2011, the following Harbor Funds reduced distributions to shareholders by the amount of capital loss carryforwards able to be used:

Domestic Equity Funds International & Global Funds Strategic Markets Fixed Income Funds
Capital Appreciation International Flexible Capital Convertible
Securities
Mid Cap Growth International Growth    
Large Cap Value Global Value
Mid Cap Value Global Growth
Small Cap Value
Small Company Value
 

Information on the size and expiration date of these capital loss carryforwards is available in the Harbor Equity Funds Annual Report page 75, Harbor International & Global Funds Annual Report page 55 and Harbor Fixed Income Funds Annual Report page 102.
Why didn't I receive a Form 1099-B? Show
The following may be reasons why Harbor Funds did not issue you a Form 1099-B:
  • Redemptions or exchanges from the Harbor Money Market Fund are not reported.
  • You did not make a redemption or exchange during the calendar year.
  • The tax status on your account may be listed as "exempt recipient". A corporation, charitable organization, IRA political subdivision or pension/profit sharing plan may be exempt from reporting.
  • Nonresident aliens will not receive a Form 1099-B. Form 1042-S will be mailed to nonresident aliens by March 15.
Why did I receive a Form 1099-B? Show
All redemptions and exchanges from your Harbor Funds account are taxable and must be reported on your tax return. Harbor Funds Form 1099-B will list all redemptions and exchanges between funds by date.