Cost basis is the original value of an asset for tax purposes (usually the gross purchase amount), adjusted for stock splits, reinvested dividends, and return of capital distributions. This value is used to determine the capital gain (or loss), which is the difference between the asset's cost basis and the gross proceeds when the asset is sold or exchanged.

PMFS supports 10 cost basis methods, providing you with ample choices and flexibility to determine the method that best meets your needs.

1. Average Cost - Under this method, we use the average basis of all shares owned at the time of redemption, regardless of how long you owned them, to arrive at the average cost. To determine the holding period, the shares sold are considered to be those acquired first. Determination of the holding period is important for designating whether a gain is long-term or short-term.
2. First In First Out (FIFO) - This method keeps track of every tax lot of shares purchased. When calculating gain or loss, this method depletes tax lots in the chronological order in which available lots were acquired.
3. Specific Lot Depletion Method (SLDM) - This method allows shareholders to choose which tax lots they are selling, thereby giving shareholders more control over whether they will generate a gain or loss on the transaction. Shareholders must specify the particular tax lots to be sold no later than the settlement date of the redemption. (For shares held at PMFS, the settlement date is the same date as the redemption date.) The gain or loss will vary, depending on which shares they choose. This method cannot be pre-selected as a default method on your account. Also, this method cannot be selected for systematic transactions such as Systematic Withdrawal Plans (SWPs), systematic exchanges, and exchange rebalancing among multiple funds.
4. Last In First Out (LIFO) - The most recent shares acquired will be redeemed first.
5. Highest Cost In, First Out (HIFO) - The highest cost shares will be redeemed first.
6. Highest Cost Long-Term In, First Out (HILT) - The long-term highest cost shares will be redeemed first.
7. Highest Cost Short-Term In, First Out (HIST) - The short-term highest cost shares will be redeemed first.
8. Lowest Cost In, First Out (LOFO) - The lowest cost shares will be redeemed first.
9. Lowest Cost Long-Term In, First Out (LILT) - The long-term lowest cost shares will be redeemed first.
10. Lowest Cost Short-Term In, First Out (LIST) - The short-term lowest cost shares will be redeemed first.

No. You may have a different cost basis method for each fund in your account. You may select any of the methods described earlier for shares acquired on or after January 1, 2012 for most PGIM Funds. For the PGIM Jennison MLP Fund, the only allowable cost basis methods are FIFO, LIFO, and SLDM. Please keep in mind that if you own different account numbers or accounts with different registrations, you should provide instructions on the cost basis method for each of your accounts.

Yes. The new cost basis reporting requirements apply only to shares purchased on or after January 1, 2012. The cost basis regulations treat shares acquired before the effective date of January 1, 2012, as if they are in a separate account (bifurcated) from shares acquired after the effective date. Please also keep in mind that PMFS is not required to report cost basis to you or the IRS on shares purchased before January 1, 2012. However, since you are still required to report cost basis on your personal tax return, in most cases PMFS will provide cost basis information to you as a service and it will be clearly indicated on Form 1099-B that cost basis information is being provided on shares acquired before January 1, 2012.

You will only need to inform us of your cost basis election if you would like to select a different cost basis method than PMFS' default method. PMFS' default method is Average Cost for most PGIM Funds and it is First In First Out (FIFO) for the PGIM Jennison MLP Fund. If you accept PMFS' default method for your taxable transactions on shares acquired on or after January 1, 2012, then no action is required on your part.

If you would like to make a different cost basis election than PMFS' default method, you may make your election online when you access your account at www.pgiminvestments.com/myaccess  Opens in a new window. Once online, choose "My Account Options," then select "View/Change" from the "Cost Basis Method Elections" section and complete your updates.

You may also submit your cost basis election to us in writing by completing the Cost Basis Election Form (MF1007)  PDF opens in a new window or by calling the Prudential Mutual Fund Service Center at (800) 225-1852, Monday through Friday between 8:30 a.m. and 5:00 p.m. Eastern time. Note: If, after making an initial cost basis election or accepting the default method, you want to change your cost basis method from Average Cost to another method, or from another method to Average Cost, under current IRS regulations, that change must be submitted to us online or in writing.

Under current IRS regulations, you have up to the date of the first redemption of shares acquired on or after January 1, 2012 to change your election. As a reminder, under current IRS regulations, if your change of method involves Average Cost, you will need to submit your request online or in writing.

If you do not make a cost basis election, the Fund's default cost basis calculation method will be used for your cost basis calculation for shares acquired on or after January 1, 2012. PMFS' default method is Average Cost for most PGIM Funds and it is First In First Out (FIFO) for the PGIM Jennison MLP Fund.

According to the IRS regulations, you cannot change the cost basis method after the settlement date of your redemption. (For shares held at PMFS, the settlement date is the same date as the redemption date.)

Yes. The IRS has issued a new version of Form 1099-B (Proceeds From Broker and Barter Exchange Transactions) to include cost basis reporting. The new Form 1099-B added boxes for Date Acquired, Cost or Other Basis, Wash Sale Loss Disallowed, and a section to indicate whether the transaction is short or long term. The new boxes will only be mandatory for purchases made on or after January 1, 2012 that are subsequently sold.

For shares acquired before January 1, 2012 that are sold, we will continue to report cost basis to you if our cost basis records are accurate and complete with all financial transactions since your account's inception. PMFS is not required to report cost basis information to the IRS for shares acquired before January 1, 2012.

Under the new regulations, transfer agents such as PMFS have until February 15 of the year following the calendar year when the mutual fund is sold to mail Form 1099-B (Proceeds From Broker and Barter Exchange Transactions). (Note: The taxpayer filing deadline has not changed as a result of the new cost basis reporting regulations.) Please keep in mind that if certain events occur such as a return of capital, a wash sale, or if adjusted cost basis was provided to the transfer agent after the original tax form was mailed, then a corrected Form 1099-B will be mailed showing the new cost basis information.

Your cost basis method will be carried over on exchanges to new funds except the PGIM Jennison MLP Fund.  New accounts established in the PGIM Jennison MLP Fund through the exchange feature will default to PMFS' default cost basis method of FIFO.

Yes. Any person who is able to authenticate him or herself as the account owner's registered representative may provide instructions on the cost basis method or tax lot(s) to use at the time the transaction is requested. Telephone redemptions and exchanges are subject to the procedures and conditions set forth in each Fund's Prospectus and Statement of Additional Information.

The sending firm is required to provide a transfer statement to the receiving firm within 15 days of the transfer. The sending firm is only required to provide cost basis information for transfers of shares purchased on or after January 1, 2012.