Understanding Your Fidelity 2012 Informational Tax Statement

Our corporate and non-prototype Fidelity customers, who are exempt recipients for 1099 reporting purposes, have asked to see their year-end account information as it would appear in a Form 1099 Tax Statement. As a result, each year in February we send an Informational Tax Reporting Statement to brokerage account customers who our records indicate are exempt recipients for 1099 reporting purposes. This guide provides detailed information to help you understand your Informational Tax Reporting Statement.

Understanding Your Informational Tax Reporting Statement

2011 Tax Reporting Statement

The Informational Tax Statement is based on IRS information reporting requirements for individuals. You may be subject to different income tax reporting requirements. Depending upon your situation, this information and the information in your Informational Tax Reporting Statement may not be accurate or appropriate for tax preparation purposes. We suggest that you consult your tax advisor before using any of this information for tax preparation.

Reporting to the IRS

Please note that we generally do not send the information in the Informational Tax Reporting Statement to the IRS because we only provide Informational Tax Reporting Statements to customers who our records indicate are exempt recipients for 1099 reporting purposes and who, therefore do not receive a Form 1099 for most transactions in their accounts. We are required to report any information for your account that we record on a 1099 Tax Reporting Statement to you and to the IRS. For S-corporations, this includes proceeds and other Form 1099-B information, which, prior to 2012, was not reportable. Whereas in past years certain information appeared on either the Informational Tax Statement or on the 1099 Tax Statement, but not on both, this is no longer the case. As a result, we also include your information, reported on the 1099 Tax Statement, on the Informational Tax Statement. This is a change from past years. We have made this change so that you may have more of your tax information in one statement. We are required to report all Form 1099 information to you and to the IRS.

If you are required to file a return, the IRS may impose a negligence penalty, or other sanction, if any income from an account for which you receive an Informational Tax Reporting Statement is taxable and the IRS determines that it has not been reported by you.

Substitute payments in lieu of dividends

For both S-corporations and C-corporations, if you received a substitute payment in lieu of dividends or tax exempt interest, you should have received a 1099 Tax Statement, including Form 1099-MISC, to report these substitute payments to you and the IRS. Fidelity is offering a credit adjustment to eligible individual shareholders who received certain substitute payments in lieu of qualified dividends. However, customers with corporate accounts are not eligible for this credit adjustment.

Informational tax statement highlights

eDelivery of tax statements

Beginning with tax year 2012, customers may choose to stop receiving their tax statements by mail and instead receive an email notifying them when their tax statement is available for viewing online. In addition to 2012 printed statements sent by mail, online statements are now official copies of your tax forms. Contact a Fidelity Representative or your investment professional for further information about eDelivery options.

Proceeds from broker and barter exchange transactions: further enhancements

To support the implementation of the IRS cost basis reporting requirements, Fidelity has made enhancements to the format of Form 1099-B for the 2012 tax year. These changes are designed to make it easier for non-exempt customers to complete Form 8949, Sales and Dispositions of Other Assets, and/or Form 1040, Schedule D, Capital Gains and Losses. In addition, the IRS cost basis reporting requirements for 2012 require additional reporting for proceeds and exchanges of "covered"mutal funds (and certain other securities in dividend reinvestment plans)." For more information, see the detailed description of the Proceeds from broker and barter exchange transactions section, later in this guide.

Form 1099-B is part of the non-exempt Fidelity Tax Reporting Statement and is also part of the information that we are required to report to the IRS. Your Informational Tax Reporting Statement reflects similar changes, because it presents tax information in a format similar to a statement for a non-exempt account. Please note—with the exception of any tax information, also reported on a Form 1099 Tax Statement, we do not report any information from Informational Tax Statements to the IRS.

Tax-exempt interest dividend reporting is now in the Dividends and Distributions portion of your statement

The 2012 Dividends and Distributions portion of your statement provides tax-exempt interest dividend and specified private activity bond interest dividend amounts (mainly from mutual funds or other regulated investment companies) on lines 10 and 11. In prior years, lines 8 and 9 of the Interest Income portion of your Informational tax statement included this information. Those lines now primarily report tax-exempt interest and specified private activity bond interest from individual municipal bonds and not tax-exempt interest dividends from mutual funds. Since we have reported tax-exempt interest dividends amounts in prior years, only the placement of this dividend information is new.

De minimis reporting

Fidelity continues to follow IRS rules governing de minimis reporting. This means that we will not send you a brokerage account Informational Tax Statement if the amount on each line of the Dividends and Distributions, Interest Income, and Miscellaneous Income sections is less than $10.00. However, if you had any reporting in the Proceeds From Broker and Barter Exchange Transactions, in any amount, we will send you a complete Informational Tax Statement.

Royalty trust information

If you owned a royalty trust, by March 15 Fidelity may mail you a booklet of additional information relayed to us by the royalty trust. You may find this information useful as you complete your tax returns.

Transferred accounts

If your account was transferred to Fidelity in 2011, your Informational Tax Statement only includes activity from the time your account was established here. You may wish to contact your former clearing firm for information about any activity prior to the transfer.

The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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