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Illustrated Tax Statement — Section by Section
National Financial's 2011 Tax Reporting Statement consists of two parts:
The following sections of this guide are intended to help explain your tax statement in greater detail. Sample statements shown are for illustrative purposes only. Certain categories of transactions may not pertain to your account. Tax Reporting Statement
 Lists all taxable dividends, long-term capital gain distributions, nondividend distributions, and certain investment expenses, as well as foreign tax paid. This may include dividends and/or distributions from the mutual fund you use as your core money market fund. You must report dividends and capital gain distributions reported on Form 1099-DIV on your federal income tax return, regardless of whether they were paid in cash or reinvested. Please note, the dividend amounts that we report may be higher than the amounts that you actually received. If foreign tax was paid, the amount that you may be able to claim as a deduction or credit is reported on Line 6 on Form 1099-DIV and that amount is also included in the dividend amount reported in Line 1a and, if applicable, Line 1b. For this reason, the total dividends reported on the form may be higher than the amount that you actually received. We report all dividends in U.S. dollars (USD). If the dividends that you received were paid in a currency other than USD, we convert the foreign currency dividends into USD and report the USD equivalent on Form 1099-DIV. Due to IRS reporting requirements governing widely held fixed investment trusts, National Financial reports investment expenses on Line 5 for certain unit investment trusts or HOLDRS trusts. We also include those expenses in the dividends reported in Line 1a, because we are required to report gross trust dividends including expenses. Because we are reporting gross dividends, the total dividends reported on the form may be higher than the amount that you actually received. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.  This IRS form lists all interest you earned on government and corporate debt obligations and short-term certificates of deposit, as well as interest earned from cash in your account. Line 8 reports tax-exempt interest, including exempt-interest dividends from mutual funds or other regulated investment companies. Add this amount to any other 2011 federal tax-exempt interest (including any tax-exempt original issue discount interest) you have earned, and report the total on Line 8b of Form 1040 or Form 1040-A. You may also be required to report this information on your state income tax return. Line 9 reports any applicable specified private activity bond interest. Specified private activity bond interest must be taken into account in computing the federal Alternative Minimum Tax (AMT). The tax-exempt interest reported on Line 8 includes this specified private activity bond interest, if any. For more information, see the IRS Instructions for Form 6251, Alternative Minimum Tax-Individuals. In addition to federal reporting, National Financial may be required to report all or a portion of your total exempt income to California or to other state tax authorities. Line 10 shows CUSIP numbers for tax-exempt securities on which tax-exempt interest was paid to you during the calendar year and reported on Line 8. In cases in which we are reporting tax-exempt interest from more than one CUSIP, the line is marked "various." Due to IRS reporting requirements governing widely held fixed investment trusts, for certain unit investment trusts or mortgage-backed securities distributing taxable interest, reported in Line 1, National Financial reports your prorated share of investment expenses in Line 5. Those expenses are also included in the interest reported in Line 1, because we are required to report your share of any unit investment trust or mortgage-backed security gross interest before expenses were subtracted. For this reason, the interest reported on the form may be higher than the amount that you actually received. In the same manner, we also include your prorated share of tax-exempt interest investment expenses in the amount reported in tax-exempt interest, Line 8. We provide details on those expenses in the Tax-Exempt Interest Investment Expenses section of the supplemental pages of your tax statement. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor. We report all interest in United States dollars (USD). If the interest that you received was paid in a currency other than USD, we convert the foreign currency interest into USD and report the USD equivalent on Form 1099-INT.  Lists other reportable income, such as royalty payments from grantor trusts and substitute payments made in lieu of dividends. Royalty payments are generally reported on your federal income tax return, Form 1040, Schedule E. Substitute payments in lieu of dividends are generally reported as "other income" on Line 21 of your federal income tax return, Form 1040, and should be taxed at federal ordinary income tax rates. You may receive a separate Form 1099-MISC for Line 3, "Other Income," if you received a credit adjustment for a substitute payment in lieu of a qualified dividend or if you received certain credits, adjustments, or other income. Consult your tax advisor and/or tax return instructions for guidance on the reporting of other types of income that may be listed here. Due to IRS reporting requirements governing widely held fixed investment trusts, if you owned certain royalty or HOLDRS trusts, National Financial reports various expenses, as well as adjustments that affect the estimated cost basis of your shares, in the applicable supplemental sections of your tax statement. We also include your prorated share of those expenses in the royalties (Line 2) reported in the 1099-MISC, because we are required to report your royalties before expenses were subtracted. For this reason, National Financial may report a higher amount of royalties than the amount that you actually received. Investment expenses may be deductible, subject to applicable limitations. In addition, by March 15, if you owned a royalty trust, National Financial may mail you additional information relayed to us by the royalty trust. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor.  Lists gross proceeds less commissions from sales.  Lists total original issue discount. 
To comply with new IRS cost basis reporting requirements, National Financial has enhanced the design and content of the Form 1099-B. In past years, cost basis and related information appeared only in the Supplemental Information section of your tax statement and was not sent to the IRS. Starting this year, cost basis* and related information will appear on the Form 1099-B, and some of this information will be reported to the IRS. For all transactions, National Financial will report the following information to the IRS: Description (9), Date of Sale or Exchange (1a), Sales Price (2), and Federal Income Tax Withheld (4). Note that the numbers following each category correspond to the equivalent box numbers on the individual, stand-alone IRS Form 1099-B. For any transaction on your statement, if Column (6), is marked with a "P" (P = Provided to the IRS), we are also reporting to the IRS
Also new this year, you will find subtotals for multiple transactions for the same CUSIP, and new totals reporting separately short-term and long-term transactions. The new cost basis reporting rules generally require you to use any "P" information when preparing your tax returns. The IRS is updating Schedule D to reflect this new requirement. The updated Schedule D will include a new Form 8949, Sales and Other Dispositions of Capital Assets, to report individual transactions and to facilitate the reconciliation of acceptable differences between broker-reported information and your own gain/loss calculations. You must report all transactions from Form 1099-B and any other transactions, including those listed on the Supplemental Realized Gain/Loss sections of the tax statement, whether for covered or non-covered securities. Below is a summary of where you will find transaction information for various kinds of securities.
In general, customers must report the information on Form 1099-B by completing Form 1040, Schedule D. Form 1099-B lists all proceeds from the sale or other disposition of stocks, bonds, mutual funds, subscription rights expiring with a cash equivalent, taxable tenders and mergers, and short sales if opened no earlier than 2011 and subsequently closed. We report all transactions on a trade-date basis and they are the net amount after commissions. The cost basis reported reflects certain adjustments, if applicable. You may be required to make additional adjustments to properly calculate your taxable gain/loss. Reporting short sales. For tax years 2011 and beyond, new IRS rules require us to report all short sales in the year in which the short sale is closed. In prior years, we were required to report short sales on Form 1099-B when they were opened. Short sales opened prior to 2011 and closed in 2011 are an exception to the new reporting rule. These transactions are reported instead in the Supplemental Realized Gain/Loss sections of your tax statement in order to avoid reporting the same short sale twice to the IRS. The IRS generally requires shareholders to report all short sales in the year that the short sale is closed. This is not a change from prior years.WHFIT reporting. Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), we report your prorated share of the sales proceeds from the portfolios of unit investment trusts, securities derived from mortgage pools, or real estate mortgage investment conduits (REMICs) as return of principal on Form 1099-B (reported as PRINCIPAL on the form). We report your share of return of principal, whether or not you actually received a payment, because we report gross return of principal before any expenses were deducted. These reported proceeds may not match any distributions that you may have received during the year. Furthermore, for WHFIT securities, due to "receipt-based" reporting rules, your trust is required to report your prorated share of sales proceeds as of the date that they were sold by the trust and your prorated share of expenses as of the date on which they were incurred by the trust—not on the date any such sales proceeds are distributed to shareholders. This means that you may only have received a return of principal payment, listed on your 2011 Form 1099-B, in January or February 2012. You must generally report return of principal on Schedule D in order to match our reporting to the IRS on Form 1099-B. In addition, you should generally reduce your security's basis by the amount of the return of principal. National Financial includes return of principal in our calculation of your estimated cost basis. If your basis is reduced to zero, any additional return of principal should also be reported as a short-term or a long-term gain, depending upon how long you have owned the security. Foreign securities. On Form 1099-B, we report all proceeds in U.S. dollars (USD). If the proceeds that you received from a transaction were paid in a currency other than USD, we convert those foreign currency proceeds into USD based on exchange rates on the trade date of the transaction, and report those USD-equivalent proceeds on Form 1099-B. We provide additional information regarding such transactions in the Realized Gain/Loss sections of the Supplemental Information pages of this statement. *National Financial will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. National Financial specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, National Financial determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information. 
Lists the Original Issue Discount (OID) that you must report for the current year. OID reports the earned portion of the difference between the stated redemption price at maturity (if greater than one year) and the issue price of a bond, debenture, note, or other evidence of indebtedness issued at a discount (e.g., zero-coupon bond, long-term CD) that is attributable to the selected tax year. OID on Treasury obligations, listed in Column 6, is exempt from state and local income taxes. If you hold collateralized debt obligations (CDO) that include real estate mortgage investment conduits (REMICs) and collateralized mortgage obligations (CMOs), you may receive a separate 1099-OID form in March to report this OID. You may need to make certain adjustments to this information. Consult your tax advisor or see IRS Publication 1212 Guide to Original Issue Discount (OID) Instruments (PDF) for more specific reporting information. Supplemental Information We present Dividends and Distributions details in three subsections: Total Ordinary Dividends and Distributions Detail, Total Capital Gains Distributions Detail, and Distributions Detail. These subsections appear only if they apply to the transactions reported on your 1099-DIV.  We identify the short-term capital gain distributions portion of ordinary dividend distributions in this section. Generally, short-term capital gain distributions are nonqualified dividends, and, as such, are taxed as ordinary income. However, a portion of the short-term capital gain distribution may be a qualified dividend and subject to one of the lower federal long-term capital gain tax rates. Any portion of the short-term capital gain distribution that is potentially subject to one of the lower tax rates is included as qualified dividends in Line 1b. If we report foreign tax paid on Line 6, then that amount is also included in the dividends reported on Line 1a and, if applicable, Line 1b. For mutual funds, you will see such individual foreign tax entries (Line 6) as part or all of certain matching individual entries for Lines 1a and 1b. For individual securities, we do not give such a payment-by-payment accounting. Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), the dividend amounts that we report for these securities may be higher than the amounts that you actually received. In each case this is due to the requirement that we report gross dividends, before any expenses have been deducted. For WHFITs, dividends are reported as of the declaration date, not the distribution date. Undistributed income from a unit investment trust—You may find a 12/31 reporting item from your UIT, listed for Lines 1 and/or 2, which is income undistributed by your trust. Due to IRS reporting requirements, we report this income, even if it was undistributed. Once distributed in the following year, this income will be reported as a positive amount (since you have now received a distribution) and a negative amount (since it was previously listed as an undistributed distribution), thereby avoiding reporting the same distribution twice. The amount of any non-dividend distributions (Line 3) you receive will generally reduce your basis for the applicable security by the same amount.  Total Capital Gain Distributions (2a) may include, if applicable, Unrecaptured Section 1250 Gain (2b), Section 1202 Gain (2c), and Gains from Collectibles (28%) (2d). The portion of Capital Gain Distributions Subject to 15% Rate Gain is equal to (2a) less amounts shown in columns (2b) through (2d).  If you owned certain unit investment trusts, or HOLDRS trusts, National Financial reports the investment expense details for expenses reported on Line 5. We also include those expenses in the dividends that we report. For this reason, the total reported gross dividends may be higher than the amount that you actually received. Investment expenses are generally deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor. 
We present Interest Income details in three subsections: Interest Income Detail, Interest on U.S. Savings Bonds and Treasury Obligations Detail, and Interest Income, Tax, and Expense Detail. These subsections appear only if they apply to the amounts reported on your 1099-INT. 
We show Interest Income (1) (a combination of Interest Payments received, Accrued Interest received on the Sale of Bonds and OID Paid to you on Short-Term Instruments) in this subsection. 
We show Interest on U.S. Savings Bonds and Treasury Obligations (3) (a combination of Interest Payments on Treasury Bonds and Notes, Accrued Interest you received on the Sale of Treasury Instruments, and U.S. T-Bill Interest you received) in this subsection.
We show security-by-security Tax-Exempt Interest transaction details (Line 8) and Specified Private Activity Bond Interest details (Line 9), if any, from the same transactions in this subsection.IRS reporting requirements governing widely held fixed investment trusts (WHFITs) Due to the WHFIT requirements, we must generally report income based upon the date it is received by the trust and expenses as they are incurred by the trust. Here are some of the reporting consequences: Investment expenses (5)—If you owned certain unit investment trusts or mortgage-backed securities, National Financial details the investment expenses reported on Line 5. We also incorporate those expenses into the detail interest entries for Line 1 of the 1099-INT, because we are required to report unit investment trust interest before expenses have been deducted. For this reason, the reported gross interest amounts may be higher than the amounts that you actually received. In the same manner, we also incorporate your prorated share of tax-exempt interest investment expenses in detail entries for tax-exempt interest, Line 8. We list those expenses as well in the Tax Exempt Interest Investment Expenses section of the supplemental pages of your tax statement. Investment expenses are generally deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor. Undistributed income from a unit investment trust (UIT)—If your UIT had undistributed 2011 income, you may find it listed as a 12/31 distribution for Line 1. We report this income, even though it is undistributed. Once distributed in the following year, this income will be reported on next year's tax statement as a positive amount (since you received a distribution) and a negative amount (since it was listed on this year's tax statement as an undistributed distribution), thereby avoiding reporting the same distribution twice. Interest income from mortgage-backed securities—Following the IRS reporting requirements, we report income from mortgage-backed securities based on the record date rather than on any subsequent distribution date. As a result, you may find interest, distributed by your mortgage-backed security in January or February 2012, reported as 2011 income. We list such interest in the details for Line 1, dated 12/31.  Substitute payments have been separated into two categories: those that are potentially eligible for a credit adjustment and those that are not. In early March 2012, or soon thereafter as all reclassification information is available, National Financial expects to provide eligible customers* with a credit adjustment on substitute payments received in lieu of qualified dividends during the 2010 tax year. Any credit adjustments you received in 2011 for substitute payments in lieu of qualified dividends received during the 2010 tax year should be included in income for 2011. National Financial will send a separate Form 1099-MISC only for Line 3, "Other Income," which includes these adjustments, only if the total of all other income reportable to you on that line reaches the reporting threshold for that form. You may, therefore, need to consult your account statements to determine the credit adjustment amount, if any, to report on your tax return. The annual credit adjustment program is not guaranteed to remain in effect indefinitely. National Financial reserves the right to amend or terminate the program. Due to IRS reporting requirements governing widely held fixed investment trusts (WHFITs), if you owned certain royalty or HOLDRS trusts, National Financial reports various expenses, as well as adjustments that affect the estimated cost basis of your shares, in the applicable supplemental sections of your tax statement. We also include your prorated share of each of those expenses as separate items listed as royalty income (Line 2) entries. The regulations require us to report your royalties before expenses subtracting expenses. For this reason, the total royalty amounts reported on the form may be greater than the amount that you actually received. Investment expenses may be deductible, subject to applicable limitations. For more information, see IRS Publication 550, Investment Income and Expenses (PDF), or consult your tax advisor. In addition, by March 15 we will mail royalty trust shareholders supplemental information relayed to us by the trust. * You may be eligible for the credit adjustment with respect to a substitute payment in lieu of dividends on a security on loan if (1) you are a U.S. person (including U.S. citizens and resident aliens), (2) you received the substitute payment in an account registered as an individual, joint, trust, estate, or "pass-through" entity type (partnership, LLC, LLP, etc.), (3) the account is open at the time the credit adjustment is made, and (4) you would have been eligible to treat (and report to the IRS) the dividend paid on the security on loan as a qualified dividend had the security not been on loan and had you received the dividend paid on that security rather than the substitute payment in lieu of the dividend. (You will generally satisfy this condition if the applicable security is from a domestic corporation or a qualified foreign corporation, and you would have held the security unhedged for the requisite holding period for qualified dividend treatment.) Generally, qualified dividends are those paid on shares of domestic corporations and certain eligible foreign corporations, as long as the shares are held unhedged for the requisite period of time. National Financial reserves the right to deny the credit adjustment to any customer whom National Financial determines will be ineligible to receive the tax benefit of the reduced qualified dividend tax rate and to amend the eligibility terms of the program.  Securities in the Original Issue Discount Details section marked with an (A) in the "Total" column report the actual accrual information based on the purchase price of the non-REMIC securities. For all other securities, National Financial uses the default from IRS Publication 1212, Guide to Original Issue Discount Instruments (PDF) to estimate the accrual amount. If you hold collateralized debt obligations (CDOs) that include real estate mortgage investment conduits (REMICs) and collateralized mortgage obligations (CMOs), you may receive a separate 1099-OID form in March to report this OID. You may need to make certain adjustments to this information. Consult your tax advisor or see IRS Publication 1212, Guide to Original Issue Discount Instruments (PDF) for more specific reporting information.  Due to new IRS cost basis reporting rules, certain aspects of National Financial's cost basis reporting have changed, beginning with tax year 2011. See the introductory portion of this guide for further information. Here is a summary of where you will find transaction information for various kinds of securities.
The Short-Term Realized Gain/Loss section provides information that may be helpful when completing Form 1040, Schedule D. If you purchased a security in a foreign currency, then following its sale or disposition, this section provides both the cost in that currency and the estimated United States dollar (USD) cost basis* in the "Cost Basis" column (determined based on the USD equivalent of the foreign currency cost as of the trade date of purchase). If you sold a security in a foreign currency, this section provides both the foreign currency proceeds and the USD equivalent of those foreign currency proceeds (as of the trade date of the sale) in the "Proceeds" column. See the footnotes in this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions. Note that if you sold or otherwise disposed of a debt instrument that is denominated in a currency other than USD or that makes a payment calculated by reference to the value of a currency other than USD, certain tax rules may require you to treat as ordinary income/loss all or a portion of your realized gain/loss. Consult your tax advisor for more information regarding reporting of transactions made in a foreign currency. Extraordinary dividends—In general, an extraordinary dividend is a dividend that exceeds 10% of your tax basis in your stock. If you received a dividend deemed as an extraordinary dividend on stock held in your account, subsequent losses realized on the sale of such stock may be treated as long-term capital losses to the extent of the extraordinary dividend, regardless of how long you held the stock. If you believe you received an extraordinary dividend, you may want to consult your tax advisor or see IRS Publication 550, Investment Income and Expenses (PDF). *National Financial will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. National Financial specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, National Financial determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.  Due to new IRS cost basis reporting rules, certain aspects of National Financial's cost basis reporting have changed, beginning with tax year 2011. Here is a summary of where you will find transaction information for various kinds of securities.
If you purchased a security in a foreign currency, then following its sale or disposition, this section provides both the cost in that currency and the estimated United States dollar (USD) cost basis* in the "Cost Basis" column (determined based on the USD equivalent of the foreign currency cost as of the trade date of purchase). If you sold a security in a foreign currency, this section provides both the foreign currency proceeds and the USD equivalent of those foreign currency proceeds (as of the trade date of the sale) in the "Proceeds" column. See the footnotes on this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions. Note that if you sold or otherwise disposed of a debt instrument that is denominated in a currency other than USD or that makes a payment calculated by reference to the value of a currency other than USD, certain tax rules may require you to treat as ordinary income/loss all or a portion of your realized gain/loss. Consult your tax advisor for more information regarding reporting of transactions made in a foreign currency. Extraordinary dividends—In general, an extraordinary dividend is a dividend that exceeds 10% of your tax basis in your stock. If you received a dividend deemed as an extraordinary dividend on stock held in your account, subsequent losses realized on the sale of such stock may be treated as long-term capital losses to the extent of the extraordinary dividend, regardless of how long you held the stock. If you believe you received an extraordinary dividend, you may want to consult your tax advisor or see IRS Publication 550, Investment Income and Expenses (PDF). *National Financial will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. National Financial specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, National Financial determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.  This section of your statement provides information regarding certain transactions in which a customer disposes of foreign currency, namely exchanges of foreign currency for United States dollars (USD), exchanges of foreign currency for a security, and exchanges of foreign currency for a different foreign currency. It provides estimated cost basis,* proceeds, and gain/loss information for the currency disposed of in any of the foregoing transactions. Under certain tax rules, gain/loss realized on these types of transactions may be treated as ordinary income/loss. If you originally acquired the foreign currency in exchange for USD, then the estimated cost basis we provided in this section is generally that USD purchase price. If you originally acquired the foreign currency in exchange for another foreign currency, then we determined the estimated cost basis by converting the foreign currency purchase price into USD based on exchange rates on the trade date of the purchase. If you originally acquired the foreign currency in another type of taxable transaction (e.g., as proceeds from the sale of the security or as a dividend), then we determined the estimated cost basis by converting the foreign currency into USD based on exchange rates on the date of that earlier transaction. If you sold the currency in exchange for USD, then the proceeds in this section are those USD proceeds. If you used the foreign currency to purchase a security or another foreign currency, then we determined the proceeds by converting the disposed currency into USD based on exchange rates on the trade date of that transaction. For tax reporting purposes, you may be required to determine your actual USD cost basis, proceeds, and gain/loss based on the exchange rates on the settlement dates of the applicable transactions. Gains or losses from these types of currency transactions are generally reportable as ordinary income on Form 1040. See the footnotes in this section of your statement for additional information about our calculations of USD proceeds and USD cost basis in connection with these types of transactions. *National Financial will report gross proceeds as well as certain cost basis and holding period information to you and to the IRS on your annual Form 1099-B as required or allowed by law, but such information may not reflect adjustments required for your tax reporting purposes. Taxpayers should verify such information when calculating reportable gain or loss. National Financial specifically disclaims any liability arising out of a customer's use of, or any tax position taken in reliance upon, such information. Unless otherwise specified, National Financial determines cost basis at the time of sale based on the average cost method for open-end mutual funds and based on the first-in, first-out (FIFO) method for all other securities. Consult your tax advisor for further information.  Municipal Original Issue Discount information for municipal bonds may be useful for updating the cost basis of any municipal bonds you may own that were originally issued at a discount to the face value of the bond. You may need to calculate your updated cost basis information, particularly if you sell your municipal bond prior to its maturity.  Accrued interest paid when a bond purchase settles is not taxable to the buyer; instead, it is income that is taxable to the seller. Your Form 1099-INT reports the full interest payment credited to your account. You should report the full amount of interest you were paid on Form 1040, Schedule B, Interest and Dividend Income, and list the accrued interest you paid when you purchased the bond on a separate line and subtract it from your interest income subtotal.  This section lists the fees paid in 2011 from your account. We have listed these fees with the same descriptions that we used in your monthly/quarterly statements. Any fee amounts preceded by a minus sign indicate a fee reversal that we made in your account.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of the actual payment shortfall incurred by your royalty trust and/or HOLDRs trust. Actual Payment Shortfall is the difference between the actual contingent payment and the projected contingent payment from Contingent Payment Debt Instruments. See your tax advisor for more information.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of addition to basis reported by your royalty trust and/or your HOLDRs trust. When the amount of principal reported exceeds the amount distributed to you, the difference is generally added to your cost basis.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of administrative expense incurred by your royalty trust and/or your HOLDRs trust. These expenses have not been deducted from the gross royalty income reported on Form 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of generic expenses subject to the 2% AGI limitation incurred by your royalty trust and/or HOLDRs trust. These expenses are included in the gross royalty income reported on Forms 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of generic expenses not subject to the 2% AGI Limitation incurred by your royalty trust and/or HOLDRs trust. These expenses are included in the gross income reported on Forms 1099-DIV and/or 1099-MISC. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.  Margin interest paid may be deductible as an investment expense. 
Due to IRS reporting requirements for widely held fixed investment trusts, this section reports proceeds on investment expenses incurred by your unit investment commodity trust. Please note, commodity trusts do not make cash distributions. We include these expenses as negative items in this section and as separate positive line items (labeled PRINCIPAL) in the proceeds amounts reported for this security on Form 1099-B. See your tax advisor for more information.  Due to the IRS reporting requirements for widely held fixed investment trusts, this section reports your prorated share of severance tax paid by your royalty trust and/or your HOLDRs trust. Severance taxes are commonly imposed by states on the extraction of natural resources to be used out of state. We include these expenses in the royalty income reported on Forms 1099-DIV and/or 1099-MISC, because we are required to report gross income without deducting expenses. These expenses may be deductible, subject to applicable limitations. See your tax advisor for more information.  Due to IRS reporting requirements for widely held fixed investment trusts, this section reports tax-exempt interest investment expenses incurred by your unit investment trust. These expenses are not included in the investment expenses listed on Form 1099-INT, Line 5. They are included in the tax-exempt interest amount reported on Line 8. For this reason, the reported gross tax-exempt interest amounts may be higher than the amounts that you actually received. Under certain circumstances, tax-exempt interest investment expenses may be deductible, subject to applicable limitations. See your tax advisor for more information. |
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1099-DIV — Dividends and DistributionsNational Financial Services LLC, Member NYSE, SIPC Notice of Business Continuity Plans National Financial Services LLC Statement of Financial Condition 200 Seaport Boulevard, Boston, MA 02210 |