• Cost basis. Cost basis is the original cost of the asset purchased, including any reinvested dividends, reinvested capital gain distributions (for mutual funds), adjustments for sales charges, transaction fees, returns of capital and corporate actions, where applicable.
• Tax lots. Cost basis is generally tracked by tax lot, which is a group of shares purchased on the same day for the same price. Special rules apply to mutual funds using the average cost method of accounting.
• Cost basis is important when placing sell trades. Each time you sell shares, we will identify which shares have been sold based on a default tax lot method. Unless you instruct us otherwise at the time of sale, we will use our default tax lot method for the sale of your shares. You may have the option to select a different default tax lot method for your account or, in most situations, to identify a specific tax lot at the time you choose to sell shares. For more information please see the Tax lot method section below.

Why is cost basis important?

• Cost basis is important for tax purposes because it is part of the calculation used to determine the amount of capital gain or loss when the asset is sold (either by you, your heir, or donation recipient).
• Being smart about how cost basis plays into investment decisions can help you avoid paying more taxes than you need to. Reach out to your Ameriprise financial advisor and tax preparer if you have questions about your specific situation. Please note that cost basis rules apply to nonqualified accounts, so this is not relevant for IRAs or qualified retirement plans.

What securities are covered by the new tax rules and when?

• Covered is a term used to identify investments that are subject to required tracking and reporting of cost basis and holding period information under guidance of the new law and IRS regulations. Any gain/loss information is provided for informational purposes only and will not be reported to the IRS.
• Noncovered identifies those investments that are not subject to the new required basis tracking and reporting. While we may be providing you with cost basis, holding period and gain/loss information for noncovered securities, it is for informational purposes only and will not be reported to the IRS.

Investments become covered based on the investment type and the date purchased. The reporting requirement applies when covered securities are sold.

The following table provides a description of the investment types and the dates they are considered covered under guidance of the law and IRS regulations.