If you sold a security in a taxable Invest account this year, your Consolidated 1099 will include a 1099-B. Form 1099-B provides an overview of your gains and losses, along with detailed information on each individual sale.
This guide explains how your 1099-B is structured, what “covered” and “noncovered” classifications mean, and how cost basis details are reported.
How sales are categorized on your 1099-B
Each sale on your 1099-B is grouped according to two main factors:
Holding Period: How long the security was held
Covered Status: Whether your cost basis is reported to the IRS by M1/Apex, or if you are responsible for reporting it
You will see sections such as:
Category | Description |
Short-term, covered | Held 1 year or less; cost basis reported to IRS by brokerage |
Short-term, noncovered | Held 1 year or less; you are responsible for cost basis |
Long-term, covered | Held more than 1 year; cost basis reported to IRS by brokerage |
Long-term, noncovered | Held more than 1 year; you are responsible for cost basis |
Undetermined, noncovered | Holding period unknown; you are responsible for cost basis |
Covered vs. Noncovered reporting basics
Covered: M1/Apex reports cost basis to you and the IRS. These sales appear with full details on your tax forms and may prefill in select tax software.
Noncovered: M1/Apex does not report cost basis to the IRS. Cost basis data may still be provided on your tax form for reference, but you are responsible for ensuring cost basis is included with your tax filings.
Covered vs. Noncovered example
Covered Sale example:
Purchased 10 shares of ABC stock in 2022 via M1
Sold 10 shares in 2024 (held more than 1 year)
M1/Apex reports the sale and cost basis as a long-term, covered transaction to you and the IRS
Noncovered Sale example:
Transferred 20 shares of XYZ stock into M1, shares were originally purchased at another brokerage in 2009
Sold the 20 shares in 2024 (after transfer)
M1/Apex did not receive cost basis from prior brokerage
Sale appears as long-term, noncovered; you are responsible for providing cost basis to the IRS
What makes a tax lot “Noncovered”?
A sale may be reported as “noncovered” for these reasons:
Securities transferred into M1 without cost basis details from your previous brokerage
Purchases under certain employer stock plans (ESOP or ESPP)
Shares bought before IRS cost basis legislation (for stocks, generally before 2011)
Finding cost basis for Noncovered lots
For securities purchased via M1, cost basis may be available in your trade confirmations or account statements.
For transferred securities, your previous brokerage may have cost basis records.
If necessary, you can provide cost basis information to M1 for informational updates to your account.
If cost basis is unavailable, you can review your own records such as historical account statements and trade confirmations.
Reporting Noncovered sales
The sale details and any cost basis shown for noncovered lots on your 1099-B are provided for reference only.
Tax forms such as Form 8949 may be required for reporting; always refer to official form instructions. See Form 8949 instructions (IRS.gov)
M1 cannot provide updated 1099-B documents for noncovered shares. Cost basis for these transactions is for reference on your 1099-B only.
Troubleshooting & common questions
My 1099-B shows “undetermined” cost basis—what does this mean?
This means M1/Apex did not receive cost basis information for a particular sale. You are generally responsible for sourcing this information.
What if my previous brokerage cannot provide cost basis details?
Review your own historical records, such as trade confirmations or monthly account statements, for cost information.
Can I have my 1099-B updated for noncovered lots?
No. Noncovered cost basis is not reported to the IRS by the brokerage and cannot be updated on your 1099-B.
What happens if no cost basis is reported for a noncovered sale?
Without cost basis, the IRS may treat the entire sale amount as a gain, which may increase reported income from sales.
Does cost basis reported on my 1099-B for noncovered shares go to the IRS?
No. For noncovered securities, any cost basis shown is for your reference only.
M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
This content was generated using artificial intelligence and is intended for informational and educational purposes only. While reasonable efforts are made to ensure accuracy, AI-generated outputs may omit key context; and should not be construed as financial, investment, legal, or tax advice. Users should independently verify all information and consult a qualified professional before making any financial decisions.
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