Acquisition of control or substantial change in capital structure.   Any broker that holds shares on behalf of a customer in a corporation that the broker knows or has reason to know based on readily available information has engaged in a transaction of acquisition of control or substantial change in capital structure, must file Form 1099-B. Readily available information includes information from a clearing organization, such as the Depository Trust Company (DTC) or from information published on the IRS website or in an IRS publication.

  A broker is not required to file Form 1099-B for a customer who is an exempt recipient (under Regulations sections 1.6045-1(c)(3)(i) or 1.6043-4(b)(5)). For a list of exempt recipients, see the 2006 Instructions for Form 1099-CAP.

  If a broker is required to file a Form 1099-B for a customer to report proceeds from an acquisition of corporate control or change in capital structure, the broker may satisfy the filing requirements by filing and furnishing one Form 1099-B for amounts reported under both Regulations sections 1.6045-1 and 1.6045-3. However, if the customer had additional transactions during the year with the reporting corporation, then a separate Form 1099-B would be required to report each of these transactions.

Cash on delivery account.   For a sale of securities through a “cash on delivery” or similar account, only the broker that receives the gross proceeds from the sale against delivery of the securities sold is required to report the sale. However, if such broker's customer is a “second-party broker” that is an exempt recipient, only the second-party broker is required to report the sale.

Foreign currency.   If the proceeds of a sale are paid in foreign currency, you must convert the amount to be reported into U.S. dollars. Generally, you must convert the foreign currency on the payment date at the spot rate or by following a reasonable spot rate convention. For example, you may use a month-end spot rate or monthly average spot rate. See Regulations section 1.6045-1(d)(6).

Transactional/aggregate reporting.   Report each transaction (other than regulated futures or foreign currency contracts) on a separate Form 1099-B. Report transactions involving regulated futures or foreign currency contracts on an aggregate basis.

Substitute payments.   Do not report substitute payments in lieu of dividends and tax-exempt interest on Form 1099-B. Instead, report these payments in box 8 of Form 1099-MISC, Miscellaneous Income. See section 6045(d) and the Instructions for Form 1099-MISC.

Stock options.   If an employee, former employee, or other service provider, in connection with the performance of services, obtains substantially vested shares of stock from the exercise of a stock option, and sells that stock through a broker on the same day, then the broker may not be required to report the sale on Form 1099-B. For details, see Rev. Proc. 2002-50 which is on page 173 of Internal Revenue Bulletin 2002-29 at www.irs.gov/pub/irs-irbs/irb02-29.pdf.

Partnership sale.   Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, does not have to be filed if, under section 6045, a return is required to be filed by a broker on Form 1099-B for the transfer of the partnership interest.

Exceptions.   Brokers are not required to file, but may file, Form 1099-B for:

Exemption certificate.   A broker may require an exempt recipient to file a properly completed Form W-9, Request for Taxpayer Identification Number and Certification, or similar form. You may treat an exempt recipient that fails to do so as a recipient that is not exempt. See part J in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G for more information.

Transactional/aggregate reporting.   Barter exchanges involving noncorporate members or clients must report each transaction on a separate Form 1099-B. Transactions involving corporate members or clients of a barter exchange may be reported on an aggregate basis.

Member information.   In the recipient area of the Form 1099-B, enter information about the member or client that provided the property or services in the exchange.

Exceptions.   Barter exchanges are not required to file Form 1099-B for:

Statements to recipients.   If you are required to file Form 1099-B, you must provide a statement to the recipient. For more information about the requirement to furnish a statement to the recipient, see part M in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G.

2nd TIN not.   You may enter an “X” in this box if you were notified by the IRS twice within 3 calendar years that the payee provided an incorrect taxpayer identification number (TIN). If you mark this box, the IRS will not send you any further notices about this account. However, if you received both IRS notices in the same year, or if you received them in different years but they both related to information returns filed for the same year, do not check the box at this time. For purposes of the two notices in 3-year rule, you are considered to have received one notice. You are not required to send a second “B” notice to the taxpayer upon receipt of the second notice. See part N in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G for more information.

For an acquisition of control or change in capital structure, enter the corporation's name.

The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-B. Additionally, the IRS encourages you to designate an account number for all Forms 1099-B that you file. See part L in the 2006 General Instructions for Forms 1099, 1098, 5498, and W-2G.

For broker transactions, enter the trade date of the sale or exchange. For barter exchanges, enter the date that cash, property, a credit, or scrip is actually or constructively received.

For transactional reporting by brokers, enter the CUSIP (Committee on Uniform Security Identification Procedures) number of the obligation.

Enter the aggregate gross proceeds from all dispositions of securities (including short sales), commodities, or forward contracts. For reporting an acquisition of control or substantial change in capital structure, include in box 2, the aggregate amount of cash and the fair market value of any stock or other property received. See Reporting on page B-1 for more information for brokers. Show a loss, such as one from a closing transaction on a forward contract, as a negative amount by enclosing it in parentheses. If the aggregate amount reported includes a loss from a corporation that has undergone a change in control or substantial change in capital structure, advise the recipient separately of the loss amount and check box 12. The recipient is prohibited from using the loss to offset other capital gains.

To determine gross proceeds, you may take into account commissions and option premiums if this treatment is consistent with your books. You may not take into account state and local transfer taxes. Check the applicable box to indicate which amount has been reported to the IRS. Do not include amounts shown in boxes 8 through 11.

Do not include any accrued interest on bonds sold between payment dates (or on a payment date) in this box. Instead, report this accrued interest on Form 1099-INT.

Enter the gross amounts received by a member or client of a barter exchange. This includes cash received, the fair market value of any property or services received, and the fair market value of any trade credits or scrip credited to the member's or client's account. However, do not include amounts received by a member or client in a subsequent exchange of credits or scrip. Do not report negative amounts.

Enter backup withholding. For example, persons who have not furnished their TIN to you in the manner required are subject to withholding at a 28% rate on certain amounts required to be reported on this form. Use Form W-9 to request the TIN of the recipient. For foreign recipients, request the recipient complete the appropriate Form W-8. See the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY.

Enter the number of shares in the reporting corporation that were exchanged by the shareholder.

Enter the class of stock (for example, preferred, common, etc.) exchanged in the reporting corporation for cash or other property received. Abbreviate the class to fit the entry. For example, enter “C” for common stock, “P” for preferred, or “O” for other. Also abbreviate any subclasses.

For transactions other than an acquisition of control or substantial change in capital structure, enter a brief description of the disposition item (for example, 100 shares of XYZ Corp. stock). If necessary, abbreviate the description so that it fits within box 7. For regulated futures contracts and forward contracts, enter “RFC” or other appropriate description.

For bartering transactions, show the services or property provided.

Enter the profit or (loss) realized by the customer on closed regulated futures or foreign currency contracts in 2006.

Enter the unrealized profit or (loss) on open regulated futures or foreign currency contracts at the end of 2005.

Enter the unrealized profit or (loss) on open regulated futures or foreign currency contracts at the end of 2006.

Enter the aggregate profit or (loss) for the year from regulated futures or foreign currency contracts. Use boxes 8, 9, and 10 to figure the aggregate profit or (loss).