Reporting stock transactions

[NotEasy]

This year, all the cost basis and the realized gains are reported on the 1099B and sent to the IRS by the financial institution, unless due to special situation that the financial institution does not have the cost basis information.

Suppose a taxpayer made thousands of trades in 2011 and the 1099B has all the cost basis information already, do we still have to enter all the transactions trade by trade on the Form 8949? Can we just enter the grand total from the 1099B? I am thinking the IRS already has the trade by trade information from the 1099B already.

[Gary2]

This year, all the cost basis and the realized gains are reported on the 1099B and sent to the IRS by the financial institution, unless due to special situation that the financial institution does not have the cost basis information.

Suppose a taxpayer made thousands of trades in 2011 and the 1099B has all the cost basis information already, do we still have to enter all the transactions trade by trade on the Form 8949? Can we just enter the grand total from the 1099B? I am thinking the IRS already has the trade by trade information from the 1099B already.

If the statement contains the data required by the 8949, then yes, send it with an 8453. However, if it doesn't - and it won't in many cases - you can't.

[RLymanC]

1099b

I would concider entering the bottom line on all short and long term trades....enter the lump sums...package up all 1099-B's and mail with the tax return.

[ttbtaxes]

If the statement contains the data required by the 8949, then yes, send it with an 8453. However, if it doesn't - and it won't in many cases - you can't.

Why do you say that the stock gains and losses provided by the broker won't, in most cases, contain the data require by the 8949?

[Gary2]

Why do you say that the stock gains and losses provided by the broker won't, in most cases, contain the data require by the 8949?

I didn't say most, just many - specifically those where it doesn't have the basis, or much less often, where the basis is wrong. That doesn't sound like the situation in this case, just many other cases. I'm sorry if I gave the wrong impression.

Nevertheless, in this case, every line on the 1099B should be checked for any exceptions.

[ttbtaxes]

I didn't say most, just many - specifically those where it doesn't have the basis, or much less often, where the basis is wrong. That doesn't sound like the situation in this case, just many other cases. I'm sorry if I gave the wrong impression.

Nevertheless, in this case, every line on the 1099B should be checked for any exceptions.

Thanks Gary, I just wanted to clarify. We're both on the same wavelength then.

[NotEasy]

If the statement contains the data required by the 8949, then yes, send it with an 8453. However, if it doesn't - and it won't in many cases - you can't.

Ok, so the taxpayer needs to send Form 8453 with the brokerage company's statements to the IRS. Will do.

Is the Form 8879 still required?

[Burke]

I didn't say most, just many - specifically those where it doesn't have the basis, or much less often, where the basis is wrong.

I have a number of clients who have 1099B's from a brokerage firm using average cost basis. However, their financial advisor to whom they pay fees to manage these investments (through the brokerage) uses first-in, first-out basis for them, so it's always been different. It's not really "wrong," just another method. But I have to code it on the 8949 as "B." Hopefully it won't be a problem. Have reported the FIFO basis method for years with all these clients and attached the statements to the return. Just don't know how closely IRS looked at them, if at all.

[death&taxes]

8879 is a signature form and still required to be signed and retained in your records. The 8453 is no longer a signature form and is just a cover sheet showing what you are shipping to IRS vis snail mail.

[NotEasy]

8879 is a signature form and still required to be signed and retained in your records. The 8453 is no longer a signature form and is just a cover sheet showing what you are shipping to IRS vis snail mail.

And I believe the tax preparer should be the one who mails in the Form 8453 with the Form 1099-B transaction statements, not the taxpayer. Am I correct?

[bgiez]

And I believe the tax preparer should be the one who mails in the Form 8453 with the Form 1099-B transaction statements, not the taxpayer. Am I correct?

Yes, you are.

[taxitc]

reporting stock transactions

What action does the IRS take when they receive the 8453 packages? Scan it into the tp's files? Manually store it somewhere? Any thoughts or knowledge?

[joanmcq]

I have yet to see a 1099-B with all of the cost basis info. All of the ones I've seen have only the trades within 2011 with basis on the 1099 (covered). The rest are still reporting basis on the 'additional info' sheets (checkbox B). Look at your reports carefully and make sure you are checking the proper box on the 8949. Most of the statements are now quite confusing.

[ttbtaxes]

The only time we'll be checking Box A is for short-term transactions that are indicated as covered by the brokerage house's 1099-B. Everything else is either Box B or C.

Every brokerage statement I have seen so far this year has basis information.

[Gary2]

I've seen a fair mix. At one extreme I've seen brokerage statements with the basis in the additional info section. Obviously this is code B, and, in my opinion, is not suitable for the 8453 option. At the other extreme, I've seen transactions segregated into short-term covered, short-term non-covered but with basis info, long-term covered, and long-term non-covered with basis info. This is the easiest to both enter and send with the 8453, assuming that all of the non-covered transactions have basis info.

In the middle, there are statements where the covered and non-covered are intermixed, so you have to read the footnotes carefully, and look for whatever mark they use. Some use asterisks for non-covered, and at least one marks each transaction with either N for non-covered or P for covered. (I don't remember what the P stands for, but it made sense when I read it.) These are a nuisance, because they typically don't subtotal the covered and non-covered separately.

Of course, you still have to pay attention to random variations such as wash sales or incorrect basis.

The most annoying one I've seen was a mutual fund with no basis info. That's inexcusable, since open-ended mutual funds, as far as I know, always have basis info. I suppose that for some mutual funds sold through brokers, it was the brokerage that was responsible for the basis, but then either the brokerage would still have it, or, if transferred to a direct account, the basis history should have been transferred as well.