Financial statement

[Possi]

Here is a new twist from the financial firm where the client has investments.

Their cover letter says regarding the realized capital gains and losses report:

"This reports the taxable gains of losses on shares....................This report is designed to minimize the input necessary on your sch D. It is only necessary to provide the IRS a summary of the short an long term gains and losses."

I thought we had to report each stock trade and not just one line for short and one line for long term gains and losses. Is this because it is a the product of a revocable living trust?

I thought that if I summarized the sales, the details had to follow the tax return, either with a paper return or sent in via 8453.

Is this firm wrong? Or am I?

[S T]

My Understanding

You can just input bottom line totals on the tax return, and then submit form 8453 along with photocopies of the transactions , but I also thought that those forms had to follow the same format as the outline of the Schedule D.

I have yet to see any brokerage house follow the "exact" format of the schedule D, if they did they could make the information available to us to download into our tax programs via excel or pdf format.

The closest Brokerage house that I have found so far, as of today, was Fidelity.

There have been prior posts on this issue on the Board.

I had a client for 2007 tax returns that was really upset with me about inputting 675 trades on Schedule D forms and charging him. His Stock Broker charges him over $12,000 per year for managed advisory fees and told him that all I had to do was do short and long transactions, and then photocopy all of the brokerage sheets.

I advised the client, sent him copies of the IRS Schedule D instructions, that when his broker and brokerage house would consider adapting to the IRS format, I would consider it, otherwise his broker could be responsbile for his tax return. As it turned out, it was a good thing, I went by each and every transaction on the 675 trades, as the brokerage house had mis reported more than one transaction and it was not included in the bottom line numbers. Either they didn't have cost basis or some other error.

I probably saved him in taxes what my fees were, but obviously he wasn't upset with is broker "churning" his account.

Sandy

[Possi]

I read the other posts...

... before posting mine. I wanted to be sure I was right on this. I believe this firm is misleading the clients and the client will think I am over charging them for work I didn't need to do, just as you experienced.

Oh well, my job is to do it right... not win a popularity contest.

Should I call the firm out on this? Or leave it alone? What would you do?

[S T]

Leave it Alone

Seems like our tax clients like to think their Brokers know everything so leave it alone. I wouldn't call it out, unless asked. If client calls you on your fees, you can always remind them that you are taking care of their tax issues, and making a whole lot less than the broker that is managing their money!

You can always copy the Schedule D Instructions, as well as the prior discussion posts on this. I just took a firm stance and said I was not going to suffer penalties from IRS as a preparer for not reporting correctly.

Client is going to incur charges either which way as far as I am concerned, whether I enter in the computer tax program, or spend the time manually reconciling and photocopying all of the multitude sheets of paper and mail with a form 8453.

I had to experience the long way around and spend hours pulling the material and put a 25 page mailout together to get my client's attention that his broker was "WRONG". Client still came back for the 2008 tax return, and I plan to charge the fee I need to for all of his "god knows how many entries of stock trades" I haven't even looked, he is on extension for 2008.

Sandy

[Possi]

Thanks Sandy!

When I read the cover from the financial firm, I was really surprised. They even included a "sample Sch D" with one single line for short term and one single line for long term.

I will keep on keepin on... thanks for the place to unload my frustration!

One night, we should all meet by the water cooler and drink a toast to another season gone!

[dyne]

I solved MY problem with MANY stock sales by referring these clients to a local
CPA who agreed that he would take all clients that I did not want. I advised one client
last year that he ALMOST reached the income level where he would not
be required to file. He came in this year with 150 stock sales. I sent him to the CPA.
Life is too short to tolerate such issues. Just MY opinion!

[ChEAr$]

Water cooler?

When I read the cover from the financial firm, I was really surprised. They even included a "sample Sch D" with one single line for short term and one single line for long term.

I will keep on keepin on... thanks for the place to unload my frustration!

One night, we should all meet by the water cooler and drink a toast to another season gone!

Oh, you mean the ice bucket at the bar! Okay, I'll drink to that, evening of April 15th

And make mine Scotch, single malt, Speyside, not peaty.

[Possi]

make mine...

... a mango martini! I'll be there!

[DTS]

... a mango martini! I'll be there!

"We don't make those mango thingies in this bar, Miss"

[ChEAr$]

And I'll just bet

"We don't make those mango thingies in this bar, Miss"

she wants one of those umbrella thingies in it, too. (grin)

[BHoffman]

she wants one of those umbrella thingies in it, too. (grin)

Yeah, and we want it served to us by a native boy in a loincloth.

[DTS]

Yeah, and we want it served to us by a native boy in a loincloth.

I guess my eyes are so tired. I really misread your post. I thought you said "naive", but see you did not.

Could you let us all know what you mean "native boy"?

[BHoffman]

Naive boys can be charming, however make sure they pay you and sign the 8879 forms before they leave. But I digress.....

Native boy in loincloth would be a doe-eyed creature with a brilliant smile who speaks no English and is blessedly silent and arrives at just the right moment with that umbrella garnished refreshment. Ahhhh. Native boy #2 is in charge of fanning with palm fronds.

BTW: I'm totally kidding

[DTS]

Naive boys can be charming, however make sure they pay you and sign the 8879 forms before they leave. But I digress.....

Native boy in loincloth would be a doe-eyed creature with a brilliant smile who speaks no English and is blessedly silent and arrives at just the right moment with that umbrella garnished refreshment. Ahhhh. Native boy #2 is in charge of fanning with palm fronds.

BTW: I'm totally kidding

Boy, you so need a vacation!