2011 draft tax forms from the IRS

[FEDUKE404]

The list is ever-growing:

http://www.irs.gov/app/picklist/list/draftTaxForms.html

Schedule D + Form 8949 look particularly challenging.

Memo to self: Charge much more next season for reporting client stock sales!!

The Form 5695 also looks like the proverbial can of worms.....primary residence? or second home? or new construction? But at least rental property is apparently again off the table (that's almost logical).

It's gonna be a fun year!!

FE

[JohnH]

I noticed the Sched D + 8949 doesn't have a "total" column on the 8949. But it does offer a better way to group transactions based on the type of brokerage statement and/or transaction type.

Looks like the 1120 has been expanded, but taking the COGS section off the main form and making it a separate schedule seems wasteful / unnecessary. (but maybe I just have more simple clients than most others. I know I've never had to fill in the foreign and affiliated corporations info under Other Info on the Sched K). Seems like a COGS schedule could have been fit onto the white space at the bottom of page 2.

It also appears that the revenue breakdown on the 1120 was designed to fit into the now-defunct "new 1099" rules by breaking out charge card receipts as a separate line item.

[Burke]

I noticed the Sched D + 8949 doesn't have a "total" column on the 8949. But it does offer a better way to group transactions based on the type of brokerage statement and/or transaction type.

The 8949 I linked to has totals columns at the bottom of Pages 2 & 3.

[Nashville]

Notice the Obvious

on Form 8949. IRS wants all the transactions from 1099-B lumped together in one column. Rather obvious that they plan to amalgamate this section of the 8949 to their wonderful "matching" program.

Expect the usual fallout from this. Untrained preparers not filling out the 8949 properly. Errors in the 1099-B. And let us not forget the beloved CP-2000 letters that clients will get in the summertime.

Brace yourselves...

[FEDUKE404]

Reporting stock transactions

on Form 8949. IRS wants all the transactions from 1099-B lumped together in one column. Rather obvious that they plan to amalgamate this section of the 8949 to their wonderful "matching" program.

Expect the usual fallout from this. Untrained preparers not filling out the 8949 properly. Errors in the 1099-B. And let us not forget the beloved CP-2000 letters that clients will get in the summertime.

Brace yourselves...

I assume you have also looked at the "improved" Form 1099-B ?

There could be a lot of potholes related to cost basis issues et al as shown there. Hopefully the data on that document will be somewhat more meaningful than that which regularly appears on the infamous Form 1098-T!

FE

[JohnH]

The 8949 I linked to has totals columns at the bottom of Pages 2 & 3.

Yes, but the totals at the bottom of the page are for the Sales Price, Cost Basis, and Adjustments to Basis columns. There is no column for the gain or loss on the form at all. That column is very useful for catching errors on a transaction-by-transaction basis,

If the net gain or loss is off, the form doesn't provide an easy way to identify the error. I usually just scan the gain/loss results to catch data entry errors when my grand totals don't agree with my supporting documentation. (Of course, I realize I could eliminate this problem very simply by just not making any errors when I enter the data.

[Acownt4it]

tax forum

Just returned from the IRS Tax Forum in Orlando. This is from their Power Point slide (my notes are in ():
Stock Transactions
Revised Form 1099-B
New Form 8949, Sales and Other
Dispositions of Capital Assets
- Filed with Schedule D
- Includes information previously on
Schedule D
- Replaces Schedule D-1
Schedule D now a summary schedule

Form 1099-B
Includes basis information (for stocks aquired after 2010)
New boxes for date of acquisition, cost,
loss disallowed due to wash sale,
non-covered security, and whether
short-term or long-term gain

Form 8949
May need multiple Forms 8949
No gain or loss figured per transaction
– totals carried to Schedule D
(two parts to this form: Part I-short term gains/(losses), Part II-long term gains/(losses). There will also be three boxes for each part and you must check one.
1. Have basis on 1099-B
2. Don't have basis on 1099-B
3. Don't agree with basis on 1099-B.
If all your stocks can be categorized together as indicated with the checked boxes, then just one 8949 needed, otherwise you need a new 8949 for each checked box. Short term and long term are treated seperate so you can have different checked boxes on one form for short or long term. Confused yet?)

Schedule D (Form 1040) (the max. amount of summary lines will be 6)
Summarizes Forms 8949
Gain and loss figured once, based on
totals from Form(s) 8949
Page 2 of schedule does not change

Are we having fun yet?

[FEDUKE404]

Stock sale reporting

--Form 1099-B--
Are we having fun yet?

Thank you VERY much for the information.

I think I may need to upgrade my Jack Daniels supply next spring. That item should easily fall into the "reasonable and necessary" business expense category??

Based upon what you heard at the seminar, can you please address this potential situation:

A client has been involved in a DRIP program for years. Some of that stock will likely be sold this year (FIFO). I guess in theory the "original" shares get sold first, and then some of the DRIP shares, viz a running total concept. With that in mind, what.....if anything......might show up on the forthcomng Form 1099-B re original cost et al??

The best information I've obtained so far is that the basis/cost tracking reporting rules for Form 1099-B come into play only for the newer purchases, and the basis of stock bought/obtained/inherited prior to that time does not need to be reported by them. But then the stock brokers are apparently doing some arm twisting of their own - "you gotta get us the historical basis information....or else!"

I just foresee an absurd amount of preparer time and effort going toward accurately reporting some (most?) stock transactions for 2011 sales.

Again, thanks for your input!!

FE

[Jiggers]

I just foresee an absurd amount of preparer time and effort going toward accurately reporting some (most?) stock transactions for 2011 sales.


FE

I am going to laugh all the way to the bank. For years I have been charging for each transaction on the Schedule D. My clients expect it. Now the fees are going to go up even more. And I will tell the clients that when we review the schedule D and I will show them the new forms!

[Acownt4it]

Time and patience

FE-I am not familiar with a DRIP program, however basis will only have to be reported on stock AQUIRED after 2010. Hence the reason for the three check boxes on the 8949.

Like Jiggers said, it is just more $$ in our pockets, but it is also going to be more time explaining to our clients why our fees went up so much. Not to mention the discussions with our clients that they verified and agree with the basis reported.

Oh well, I guess this is just job security.

[FEDUKE404]

More pain but somewhat deferred

I am going to laugh all the way to the bank. For years I have been charging for each transaction on the Schedule D. My clients expect it. Now the fees are going to go up even more. And I will tell the clients that when we review the schedule D and I will show them the new forms!

Point well taken....

I just got off the phone after talking with a DRIP representative. Apparently for shares held in a DRIP program the "new rules" don't start until 2012.

BUT - after that time - they will report the cost basis whatever for sale of each "piece." Let's assume someone sells ten years worth of DRIP stock, having paid quarterly dividends that were reinvested.....that makes **40** basis amounts and the same amount of separate sales which they report to the shareholder and to the IRS. Again, this was what the representative explained to me....and she seemed to be quite knowledgeable. (She also said many folks are seriously considering exiting the DRIP program, prior to 2012, in part to avoid this oncoming storm.)

"Fasten your seatbelts, it's going to be a bumpy night!"

FE

[DonPriebe]

Form 8949

...
There will also be three boxes for each part and you must check one.
1. Have basis on 1099-B
2. Don't have basis on 1099-B
3. Don't agree with basis on 1099-B.
...

That's what I heard also, but it's not what the draft 8949 shows, which is
1. Have basis on 1099-B
2. Don't have basis on 1099-B
3. NO 1099-B RECEIVED

[WhiteOleander]

I was looking at the form also. It has a column for basis adjustment. So, I am "assuming" that if your client has a different basis than the 1099B it would be adjusted there. So, I wonder if the IRS plans to follow up and question those adjustments.

[DonPriebe]

I was looking at the form also. It has a column for basis adjustment. So, I am "assuming" that if your client has a different basis than the 1099B it would be adjusted there. So, I wonder if the IRS plans to follow up and question those adjustments.

Or worse yet - require detailed backup with the form. I guess we won't know until they release the (draft?) instructions

[joanmcq]

'No 1099-B' items would be puts & calls and other items like house or collectible sales, IMHO.

I looked over the forms and didn't notice the lack of a tally for gains/losses per transaction. This is where I also double check all of my entries when I screw up the input. Or even better, double check the input as I'm doing it. What the hell were they thinking?

And yeah, DRIPs will still be a PITA. And what employee knows to keep the DRIP records? None I've ever seen. One guy I told to hold onto his stock and let his kid inherit it; no records, so no basis, and he had been buying the stuff for at least 10 years. Didn't even have paystubs much less the papers they sent him with each purchase.