Internal Revenue Service (IRS) regulations require mutual funds to provide cost basis information for shares acquired after January 1, 2012 to shareholders and the IRS.
Noncovered shares are shares that were acquired prior to January 1, 2012, for which cost basis reporting to the IRS, from Harbor, is not required. Harbor uses the Average Cost Method to calculate your cost basis on noncovered shares. Cost basis information for noncovered shares is provided to you on Form 1099-B, but is NOT reported to the IRS. You may also view your noncovered cost basis information on your quarterly statement.
Please keep in mind that each of these cost basis methods applies only to "covered shares", which are shares purchased after January 1, 2012.
Since each shareholder's tax situation is different, you may want to consult your qualified tax advisor for guidance on your cost basis selection.
Please note that average cost for noncovered and covered shares are tracked separately, so you will have two average cost figures.
If you have established Online Access for your account you may elect a new cost basis method, for your existing account(s) and future accounts, via our website 24 hours a day. To register for Online Access or log in to your account, click here.
You may also select a different method by completing the Cost Basis Election Form.
Mail the form to the appropriate address below.
First class mail to:
P.O. Box 804660
Chicago, IL 60680-4108
Express or registered mail to:
111 South Wacker Drive
Chicago, IL 60606-4302
Please be aware that Harbor Funds is not responsible for any mail that is lost or misdirected by the U.S. Post Office or any other delivery service.
When reporting cost basis information on your federal and state income taxes, you should carefully review the cost basis information provided by Harbor Funds and make any necessary adjustment to cost basis, holding periods or wash sales. You are solely responsible for complying with all federal and state income tax laws when filing income tax returns.
For the purpose of determining wash sales, Harbor tracks purchases and sales of identical shares within the same account. If a wash sale occurred, it will be reported as such on Form 1099-B. Please note that Harbor does not track wash sales across different registrations (for example, between an individual account and a joint account) and shareholders are still obligated to correctly account for all wash sales when filing an income tax return.
If you have already sold, exchanged or transferred shares while using average cost, you are locked into average cost for those shares that were acquired before you changed your method. Any new shares acquired after you change your method will use the new method selected.
If you have not sold, exchanged or transferred shares while using average cost, your new method will apply to all covered shares in your account.