Liability

[AccTaxMan]

Client has tens of thousands of stock transactions last year. I think he used program trading. The total gross proceeds is almost 130 millions.

It is impossible for me to report all the transactions entry by entry because there are just too many of them. Client said somehow he can calculate the total profit.

If he gives me the total profit in writing and I just enter it on the Schedule D, what's the liability on my part? Is the tax preparer supposed to verify the gain/loss?

Note the total proceeds of all the transactions is 130 millions. So even if he is just 1% off, the different will be over 1 million. I am worried.

[bgiez]

I wouldn't do it

I believe the transactions are supposed to be listed individually. If your client has it in a spreadsheet, you may be able to import it into your software (although perhaps not with the quantity you state), or to format the spreadsheet so it matches the Schedule D format and attach the list, putting the totals on the D. I've done the former, but not the latter.

[Lion]

Wash Sales

With that many trades, you also have to account for wash sales. So, you will be going over all the trades. But not typing them in! Have him or his brokerage give you the gain/loss statement in spreadsheet format to import into your software. Or, include it on paper with Form 8453 to mail in while still e-filing the return with just short-term and long-term total proceeds and cost basis. Of course, you will proofread making sure the return's gross proceeds match that reported on his 1099-B.

[Gary2]

Anyone doing that much trading should be using either a broker that does proper D-1 reporting or a third party service that can take the raw transaction data and create a substitute D-1. Either way, for electronic filing, you enter the short and long term nets, while the statements go with the 8453.

I don't know the capacities of the various tax software products, but my guess is that you probably don't want to import thousands of transactions. Even if it could do so without crashing, it's likely to slow down to a crawl.

[DonPriebe]

Tens of thousands ?

I don't know the capacities of the various tax software products, but my guess is that you probably don't want to import thousands of transactions. Even if it could do so without crashing, it's likely to slow down to a crawl.

Just checked Pub 1346 for this year. The IRS e-file protocols limit the long and short term capital gains transactions to 5000 each. Anything over that and you cannot import - you must use the attachment submitted on an 8453 method or paper file.

[AccTaxMan]

Thank you for your reply.

I think I will not have the time to deal with this issue.

Is anyone in this forum interested in handling this case? Please send me a PM if you do. I will tell you more in detail.