When you transfer shares to Cache, federal rules require your sending brokerage to report the cost basis for “covered” shares within 15 days of the transfer. Whether a share is covered depends mostly on when you acquired it.
Covered shares
Covered shares are generally stocks acquired on or after January 1, 2011 (or for mutual funds and ETFs, those acquired on or after January 1, 2012).
Your sending brokerage sends Cache the basis and acquisition date for each lot.
Cache tracks it from there, and when you sell, Cache reports both the proceeds and your basis to the IRS on Form 1099-B.
Noncovered shares
Noncovered shares are generally stocks acquired before January 1, 2011 (or for mutual funds and ETFs acquired before January 1, 2012), or ones that don’t have reliable basis records, such as some shares held as paper certificates.
Your sending brokerage doesn’t have to send basis for these shares, so you will need to report your cost basis.
When you sell, Cache reports only the proceeds to the IRS, and you’re responsible for reporting your basis on your tax return.
What this means for your transfer to Cache:
In most cases, choosing automatic retrieval is the simplest option. Cache uses the official records your sending brokerage transmits, and covered lots stay covered.
If your brokerage’s records are incorrect or missing, or if your stocks are noncovered (e.g. acquired before January 1, 2011), you will need to enter cost basis manually from your dashboard.
Without official statements to support what you enter, those lots will be marked noncovered. Either way, keep your own record of the lots you transferred and what you paid for them.