### Question
How is the term covered security defined?


### Answer
The term **covered security** is defined in *26 U.S.C. § 6045* as the following:

> any specified security acquired on or after the applicable date if such security—


(i) was acquired through a transaction in the account in which such security is held, or


(ii) was transferred to such account from an account in which such security was a covered security, but only if the broker received a statement under section 6045A with respect to the transfer

#### Citation:
  - *26 U.S.C. § 6045*
  - Heading: **Subtitle F-Procedure and Administration > CHAPTER 61-INFORMATION AND RETURNS > Subchapter A-Returns and Records > PART III-INFORMATION RETURNS > Subpart B-Information Concerning Transactions With Other Persons**

