Whom Ever

[CLOGGER]

Re: 1040, client have over 500 trades on the NYSE. How do you E-file without needing to
list all 500 trades on schedule D?

[AuditorTurnedGood]

You can submit

the detail in paper using Form 8453 within a few days of EFing the return. Put the ST and LT gains/losses on Sch D and reference seperate detail. Or, if the trades are in Excel format, you might be able to import them into your software (I know Drake does this,)

[FEDUKE404]

Specifics on Form 8453 and Sch D

I recently made a similar inquiry to software folks.

1 - Form 8453 is needed as others have stated.

2 - Information on the statement must be consistent with that shown on Schedule D. I take that to mean the same sequence of information categories on both documents.

3 - ST/LT must be separated for the broker statement. Name of security sold is "Statement Attached" with purchase date of "Various" and a sale date of 12/31/2009.

Most software will automatically handle the mechanics of doing all of this.

In response to a specific question, I was told that you need to go through this process for each statement attached, i.e. five statements each covering one hundred transactions cannot be listed as a single "Statement attached" covering five hundred transactions. You would need five separate entries on Schedule D.

FE

[Bees Knees]

Why in the world would you not want to list each transaction and charge your client for 500 trades?

This illustrates my point. We as a profession are the worst at charging fees. If your client wants to play the stock trade game, make him/her pay for your services. Start the clock and bill him/her for every second it takes for you to enter those 500 transactions into your computer.

This is a perfect opportunity for you to earn a living and you are trying to figure out a way not to earn it.

[gkaiseril]

Sort of like charging 15 minutes of time for a 2 minute billable phone call! But not as profitable.

Not all know how to Cut Paste and Attach.

I for one am glad many large brokerage houses are providing the appropriate information for their clients' activities. One just needs to account for wash sales.

[erchess]

Rationale

In the long run bees if he follows your advice he is likely to lose out to someone who will take the easier route and charge proportionately less. We only make money in the long run if we supply value to our clients in proportion to our fees. If two procedures reach the same outcome for the client and are equally acceptable to the taxing agency then the only appropriate course is the one with the lower cost to the client.

[Bees Knees]

I've never lost a client for tacking on an extra $200 for spending an hour and a half entering Schedule D data into the computer. Its all in how you explain your fees to your clients. Something we as a profession do a poor job at, in my opinion.

[tilt53]

There's always a chance that the IRS will come back and require the details. I had it happen last year with a client who had a very precise Fidelity statement attached to the 8453. The IRS wanted details. I sent them the statement (with highlighted and flagged short and long term totals) and Sch. D again, and then when they wouldn't accept the statement I had no choice but to enter almost 400 individual entries during tax time. Fortunately, the client wasn't pissed at me (since I had to charge her for my time) but at the IRS for being so pig-headed.

[gkaiseril]

Providing accurate, efficient, and reasonably priced services will allow one to not only keep a client but demonstrate that you have their overall best interest in mind. Explain how much you will save them in fees for this method and then use the time saved to service another client or two.

Of course you may find an IRS employee that does not understand this technique.

You may also need to tie out all the 1099-B Gross Proceeds to the detailed statement.

It may also be possible to obtain the transaction detail in a format that can be used with Excel, then one can order and total the columns just like a Schedule D.

[Bees Knees]

2 - Information on the statement must be consistent with that shown on Schedule D. I take that to mean the same sequence of information categories on both documents.

And I've never seen a broker statement look exactly like a Schedule D. They always manage to add something or re-arrange the order of something. Thus, the reason why I tell my clients it has to be manually entered into the computer.

[Bees Knees]

Providing accurate, efficient, and reasonably priced services

There is a difference between taking short cuts just to be cheap and following the rules. I disagree with the idea that most brokerage statements can simply be copied and attached to the return.

Schedule D instructions say:

Instead of reporting your transactions on
Schedules D and D-1, you can report them
on an attached statement containing all the
same information as Schedules D and D-1
and in a similar format.

Note that it does NOT say you can attach a brokerage statement in their format. It has to look like a Schedule D...something I have yet to see from a brokerage statement.

[gkaiseril]

I believe I indicated the statement needed to supply all the data needed by the Schedule D.

I have even been emailed Excel files from brokers that had all of the columns required by the IRS. It was than a simple matter to add a formula to identify short and long term sales, sort the data and subtotal by the short and long term sales. Add the clients name and SSN and provide any infomation to tie out to the total of the 1099-B's.

[jimenright]

and ...

be careful ....

If your client has purchased shares from publically traded partnerships, the information statements with gain / loss info from the broker will almost certainly be incorrect as far as determining the correct amounts to put on the schedule D and/or 4797. In this case the information with the K1 will have the correct info. The totals on the broker statements will also be incorrect in this case. At least that is my experience.

[AJsTax]

What??

And I've never seen a broker statement look exactly like a Schedule D. They always manage to add something or re-arrange the order of something. Thus, the reason why I tell my clients it has to be manually entered into the computer.

I would hope you are being ironic here. I have found most broker statements recently to be in a "similar" format as the sch D as the regulations state. If I charged a total of $200 to any of my clients I would lose EVERY one of them, let alone that much extra for the D.
I understand that things are different in other parts of the country and all that, but in this case I find I must disagree with you. That does not happen often.
One of the great premises of our country is the right to disagree and I respect your right to your opinions and business practices, just do not have to agree with them.

[Lion]

Import

I tell the client to tell their broker to email me an Excel spreadsheet. My software allows me to designate which column to put where for a fast and easy import. If the broker does not comply, I tell my client how much it costs them to have me do the work their broker would not supply. My clients pay more than $200 in fees to their brokers, so you can be sure I'm going to charge for my time. I don't think I have more than one return less than $200.