Ordinary income capital gain/loss

[JG EA]

I've asked this question before but can't find the thread. If on stock sales there is this category in the print out (Smith Barney) do you put that gain/loss into the 28% bracket and that satifies the ordinary income requirement?

My software says "Force into 28%" .Is this the correct choice?

[Nashville]

Need to know more

28% capital gains are rare, and I believe the software allows you to designate that type of gain instead of trying program something that is so situation-dependent.

To my (limited) knowledge, the only things falling into that category are some "collectibles" and installment sales whose original sale happened to fall in one of those years when the 28% bracket was in effect.

[Burke]

You may see this more and more. I had to inquire of the brokerage last year about what the TP had that fell into this category after never having seen it before. The broker didn't know either but he could trace it and had to research. It was gold bullion, and was part of a mutual fund's holdings that were sold. Currency is the new hedge.

[Lion]

Stock Options

Just had some disqualifying stock options -- ESPP held for less than two years -- that had an ordinary income component to be reported to his company and included in his W-2 as well as a capital gain component to be reported on Schedule D. The brokerage did an excellent job of laying out the paperwork. They reported to the company who reported to the payroll company. Payroll subtracted it from FICA, which they were supposed to do; but they also subtracted if for Box 1, which they were NOT supposed to do. My software company told me to dummy up a second W-2 with Box 1 only to get it on Line 7 where it belongs. In this case he had a capital loss with positive ordinary income. There are a few situations with various types of stock options in which you can have ordinary income as well as capital gain/loss.

[JG EA]

28% capital gains are rare, and I believe the software allows you to designate that type of gain instead of trying program something that is so situation-dependent.

To my (limited) knowledge, the only things falling into that category are some "collectibles" and installment sales whose original sale happened to fall in one of those years when the 28% bracket was in effect.

It is the last column on the Smith Barney report. Right after they show the net gain/loss. Then the same amount (for a few of the sales) is repeated in this column. I was wondering if I put it in the 28% box if that would make it ordinary income. The frustrating thing about this is I had this very question before and someone told me how to treat this and I can't find it now. 28% is higher than this client's bracket so wouldn't that work for making it ordinary income? Or do I actually zero it out on D and put it in line 21? I guess if there are overall losses then it is still getting capital gain treatment in that it is zeroed out by the losses, so maybe I should put it on page one.

[Kram BergGold]

Sb 1099

My client sold a bond in 2008 at par. The SB 1099 showed the gain as ordinary. I looked this up and gain due to market discount on a bond is reported as interest income on Schedule B. So I showed basis as equal to sales price on Scheduel D and entered the gain as interest on Scheudle B.

[JG EA]

Thank you Kram BergGold. Before I read your post however, I called SB today and they said to ignore this column!! Really. He said it was not needed and they are trying to eliminate on the reporting statement because it confuses people. Well, I tried 28% and no change (because stock loss). So, I am going to assume they are either right or like you said it belongs in interest and they already put it there.

I know it is very fast and loose, so if I don't post again you'll know I am in jail.