What is cost basis?
To determine whether you have a capital gain or loss on shares you sold or exchanged, you must establish your
cost basis. Cost basis is the price you paid for your shares, including any sales charges. The difference
between the amount you received when you sold or redeemed your shares and your cost basis represents your gain
or loss. In this way, your cost basis will help you determine how much you owe in taxes or can claim as a
deduction.
What is reported?
Delaware Funds by Macquarie® is required to provide cost basis information to shareholders as well as to the IRS
on Form 1099-B. The requirement applies only to “covered shares” — shares that are purchased (and subsequently
sold) after January 1, 2012.
What are covered shares?
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Covered shares are those purchased after January 1, 2012, including shares acquired via reinvestment of
dividends and capital gains.
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Delaware Funds by Macquarie is required to report the cost basis information of these shares to both the
shareholder and the IRS on Form 1099-B.
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You may elect the cost basis method to be used. Please see What cost basis methods are available? for more
information on cost basis options. For the default method used by Delaware Funds by Macquarie, see What default method does Delaware Funds by Macquarie
use?
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Covered shares will begin to deplete after noncovered shares, unless the shareholder elects otherwise.
What are noncovered shares?
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Noncovered shares are those purchased prior to January 1, 2012.
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Delaware Funds by Macquarie may already provide shareholders with a cost basis calculation using the Average
Cost method and will continue to do so as a courtesy to the shareholder.
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The cost basis of your noncovered shares will be calculated separately from the cost basis of your covered
shares.
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Noncovered shares will be automatically depleted from your account first before covered shares.
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The cost basis of noncovered shares will not be reported to the IRS.
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What are the key dates?
| 2011 |
2012 |
2013 |
| Noncovered shares |
Covered shares |
|
| "Noncovered shares" are any shares purchased before January 1, 2012. Any cost basis
reporting is provided to the shareholder only as a courtesy and is not provided to the IRS. |
"Covered shares" are any shares purchased anytime after January 1, 2012. Cost basis
reporting is provided to the shareholder and the IRS. |
Each February, starting 2013
Tax forms with the required cost basis reporting are mailed to both the shareholder and the IRS, if
any covered shares were sold.
|
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What cost basis methods are available?
Cost basis can be calculated several ways. We recommend you consult your tax advisor and/or financial
professional before making important tax elections for your account(s). The following table outlines the
different options available to shareholders.
|
Shareholder options
|
Average Cost (ACSC)
ACSC is the default method used by Delaware Funds by Macquarie
|
When you sell shares, we calculate an average cost per share by totaling the adjusted cost of the
shares in the account and dividing that total cost by the number of shares. Adjustments may be made
to cost per share as a result of prior calculations or other transactions.
|
|
First In, First Out (FIFO)
|
Shares purchased first are sold first.
|
|
Last In, First Out (LIFO)
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Shares purchased last are sold first.
|
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Lowest Cost, First Out (LOFO)
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Shares with the lowest cost per share are sold first.
|
|
Highest Cost, First Out (HIFO)
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Shares with the highest cost per share are sold first.
|
|
Highest Long-Term, First Out (HILT)
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Shares with the highest long-term gain are sold first.
|
|
Lowest Long-Term, First Out (LILT)
|
Shares with the lowest long-term gain are sold first.
|
|
Highest Short-Term, First Out (HIST)
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Shares with the highest short-term gain are sold first.
|
|
Lowest Short-Term, First Out (LIST)
|
Shares with the lowest short-term gain are sold first.
|
|
Specific Identification (SLDM)
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Written consent is provided at the time of the liquidation to identify each share lot that is to be
sold.
|
To make an election on your account(s) held with Delaware Funds by Macquarie, fill out the Cost Basis
Election form. You may choose a different cost basis method for each account type at Delaware Funds by
Macquarie. If you wish to choose multiple cost basis methods, please use a separate form for each account type.
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What happens when no method is selected?
Delaware Funds by Macquarie has selected a default method in the event that we do not receive an election from
you. Our default method is not a recommendation and may not be the best method for your situation. The method
you choose is an important decision. We urge you to review your options and to consult your account, financial,
tax, or other advisor.
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What default method does Delaware Funds by Macquarie use?
Redemptions of covered shares will be reported using the Average Cost method, unless another method is
specified. No action is required if you choose to use the Average Cost method on your account(s).
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How do you change methods?
You may choose a different cost basis method at any time by completing the Cost Basis
Election form. However, if you elect to either use the Average Cost method, or make no selection which
defaults to the Average Cost method (see What default method
does Delaware Funds by Macquarie use?), any change to your cost basis selection after your first
redemption of covered share will only apply prospectively (that is, shares acquired before the change to your
cost basis selection will remain subject to the Average Cost method).
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Additional information
In addition, you can obtain a copy of IRS Publication 550 (Investment Income and Expenses) by calling the IRS
Forms Distribution Center toll-free number at 800 829-3676 or visiting the IRS website at irs.gov.
If you have any questions, please contact one of our customer service representatives at 800 523-1918 weekdays
between 8:30am and 6:00pm ET.
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