Reporting stock transactions

[BHoffman]

I have happily sent in copies of the brokerage statement with form 8453 and had no problem whatsoever as long as the statements contain the required Date of Acquistion and Cost Basis info. Consolidate info and report accordingly on the tax return. I think it's a silly thing for us to enter each transaction.

[Gary2]

Anybody else think that the IRS is smart enough not to attempt to match anything and issue notices this year??

Didn't they actually announce a "practice year" re the 1099K?

They weren't smart enough to set a deadline of, say, August for making changes to the 8949 codes.

[Gary2]

Gary, unless I've completely missed the boat, and that may have happened, there is no such thing as a long-term covered sale in 2011.

If someone buys stock in January, passes away in March, and the account is transferred immediately to an heir (e.g. if it's a POD account) within the same brokerage, and the heir sells the stock in April, you have a sale of a covered stock that would be treated as long-term by the heir. I haven't checked the regs, but the 1099-B instructions seem to imply that the 1099-B must take into account the knowledge that the stock came from a decedent and apply the appropriate basis rules.

[taxbuddy]

multiple stock transactions

If you have the basis and you have many stock transactions from one broker can you list one short and one long transaction or do you have to list each individual transaction? I read all of the other answers but did not see a reply to the above question.

[LCP]

Anybody else think that the IRS is smart enough not to attempt to match anything and issue notices this year??

Didn't they actually announce a "practice year" re the 1099K?

[ttbtaxes]

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.

Gary, unless I've completely missed the boat, and that may have happened, there is no such thing as a long-term covered sale in 2011.

[Jiggers]

[QUOTE=NotEasy;133819]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.
QUOTE]

Not always true. Read the 1099-B and there is probably a footnote that say the cost basis is not reported to the IRS this year and that you are supposed to mark Box B.

The cost basis may be provided by the brokerage firm as a convenience because 99.99999% of my clients have no clue.

[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.

[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.

[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.

[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?

[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.

[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?

[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.

[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.