• A bare security is an SEC designation whereby the underlying value of securities that are small and limited cannot be reported to the IRS.
  • An investment security purchased in 2011 but transferred in the same year to DRIP using the average cost method to calculate the cost basis is a naked security.
  • Shares are considered uncovered if they are sold by foreign intermediaries and foreigners (ie individuals who are absent from the country for at least 183 days of the calendar year).
  • Investment sales are also divided into covered and uncovered securities using Form 8949.