What are Noncovered shares?

Noncovered shares are stocks that a broker is not required to report to the IRS for tax purposes, specifically regarding the cost basis when they are sold. These typically include shares acquired before 2011, shares bought in a private placement, or shares obtained through options or employee stock purchase plans. Since brokers do not track the purchase price for these shares, it is the taxpayer's responsibility to maintain accurate records of the acquisition costs for tax reporting. As a result, selling noncovered shares can complicate tax calculations.