Excessive Transactions No E-File

[Nashville]

Just had my first return with too many interest/dividend transaction entries to e-file. Confused about what options exist, and how Form 8453 is used because the instructions say to send it in only if taxpayer is electing not to file electronically.

There are four Merrill Lynch tax summaries, and over 100 pages in total. The number of transactions can be condensed to only 10-12 if summaries are allowed. Then does the Merrill Lynch tax summary get sent in with the 8453??

Indulge me, please. I'm sure there are other posts about the same subject, as this year we are breaking new ground, but after reading some of the other posts, I'm just as confused as ever...

[Lion]

Interest/Dividends

I have some pretty heavy investors, but none have more than one interest, one OID, and one dividend report from each broker. Yeah some lines have dividends, qualified dividends, etc., or interest, tax-exempt interest/federal, TE/state, etc. But haven't had anyone with too many Forms 1099-INT and 1099-DIV to efile.

Are you talking about sales and the new Forms 8949? I've efiled as many as 4400 with wash sales in the past. Just starting on my large ones this year. Trying to encourage a couple of extensions!

[Nashville]

Hundreds

Lion, I'm speaking of hundreds of line items apiece for Interest, Dividends, and Capital Gains.

Just a sideline opinion, if my client thinks Merrill Lynch has a broker sitting around and doing individual investing "in your best interest" he's nuts. This crap is computer-driven by Merrill Lynch and that's scary.

[Burke]

The first page should be a summary page with all divs/int totalled for one account. Is this not the case? I do ML's all the time. And the 8453 does go to the IRS with the ML summary attached on efiled returns where you summarize the sales on 8949 with one line entry. But that is for gains/losses on 1099-B, not divs and int. I send only those pages, not the whole thing.

[Roland Slugg]

You're not confusing the info on the 1099-DIV with the "DETAIL" report of dividends, are you? The latter is just an item-by-item list of each dividend received, and it does NOT go on a T/P's return. Same for the 1099-INT and the related detail list most brokerage reports add elsewhere in their year-end reports. One 1099-INT and one 1099-DIV entry per broker is all it should take. Now, form 1099-B is quite another matter!

[Snaggletooth]

Fraught with Confusion

This is what I mean - there seems to be a distinction between interest/dividends and capital gains. There are at least 100 items for each type.

Burke tells me to list only the summary information for interest/dividends and send in only that portion with the 8953. Then tells me also to condense the capital sales on the 8949 into one item.

Slugg implies the treatment of capital sales from 1099-Bs is treated differently, perhaps NOT being condensed on the 8949...

Although I am still quite confused, I appreciate Lion, Burke, and Roland Slugg for responding to this issue. Thanks, Snag

[Lion]

Follow the Money!

For Forms 1099-INT and 1099-DIV, list them on Schedule B as they are listed on the 1099-INT and 1099-DIV by the brokerages.

For Forms 1099-B, list them on Forms 8949 as they are listed on the 1099-B by the brokerages. You may find that one sale date came from more than one purchase date. And, if you have hundreds, you may decide to total long and short term for your 8949 A, B, and C, pages and then send in the broker detail with Form 8453. You may have to go to the annual statement or other detail pages to get the basis reported to your client.

But, you do NOT have to go to the annual statement or other detail pages to get INTEREST nor DIVIDENDS reported to your client. They are on Forms 1099-INT and 1099-DIV. About the only time you'll need to refer to the annual statement would be to get detail on municipal interest to see if it's tax exempt for the client's resident state. Handle interest and dividends the same way you always did.

Actually, handle sales with gains/losses ALMOST the same way you always did except for the A, B, and C, versions of Form 8949 !!

[Gary2]

This is what I mean - there seems to be a distinction between interest/dividends and capital gains. There are at least 100 items for each type.

Burke tells me to list only the summary information for interest/dividends and send in only that portion with the 8953. Then tells me also to condense the capital sales on the 8949 into one item.

Slugg implies the treatment of capital sales from 1099-Bs is treated differently, perhaps NOT being condensed on the 8949...

Although I am still quite confused, I appreciate Lion, Burke, and Roland Slugg for responding to this issue. Thanks, Snag

Many typical brokerage reports have one page containing a 1099-INT, a 1099-DIV, possibly a 1099-OID, and a summary of gross proceeds - which is not a 1099-B.

And I find that looking at it this way is the key to understanding it. A 1099-INT doesn't have a date for the day the interest was paid (look at the official version, if you're not convinced). Likewise, the 1099-DIV doesn't have dates, but the 1099-B does. Only the 1099-B is per transaction, the others are per year.

However, because of the data entry problems, it is possible treat the 1099-Bs a little differently. You can consolidate the results from a brokerage statement (for a single account) into one to six 8949 lines, but then you have to mail a copy of the brokerage statement, along with a suitable 8453, to the IRS. So consolidating the capital gains isn't the same as the consolidation of interest or dividends that's already been done for you.

(And before anyone goes on a tangent about the one to six 8949 lines, as previously discussed it's unusual to have any non-covered short term sales or covered long term sales this year, so more likely it's one to four. And why not one or two, if it's on a brokerage statement (covered short term and non-covered long term)? Option trades don't result in a 1099-B, so a brokerage statement could still produce a box C, though long term is very rare. And now I'm panicking because I may have coded it wrong on my last return with options.)

[FEDUKE404]

Entering information that is unnecessary

Just had my first return with too many interest/dividend transaction entries to e-file. ...

I cannot imagine such a scenario.

I have had some gigantic tax documents from "major" investment firms (day traders et al) and only have to use a couple of data entry points, namely one Form 1099-DIV information field and one Form 1099-INT information field from each account. (As we know, the stock sale issues are a bit different.)

If you have four Merrill Lynch statements, you should have a maximum of four each Form 1099-DIV and Form 1099-INT entries. I don't see how this could possibly create a problem.

I will assume you are not confusing the issue of "capital gains" by mixing the amounts reported in Box 2a of Form 1099-DIV with the sales shown on Forms 1099-B ??

The detailed listings do come in handy when tracking down related income for Form 1116, or snooping out wash sales, or looking for investment expenses, or looking for interim interest issues, but I would never even consider entering each investment "event" on a tax return.

As for the stock sales, even my mid-range professional software allows 1000 transactions. Of course, with the Form 8453 option, I would not approach that limit in the first place.

FE

[Burke]

Burke tells me to list only the summary information for interest/dividends and send in only that portion with the 8953. Then tells me also to condense the capital sales on the 8949 into one item.

Sorry if I was not clear. Only the TOTAL amt of dividends paid from each entity and account (including qualified div info) go on the return, Sche B, flowing to Lines 9a, and 9b of Form 1040. You do not need to send anything additional to the IRS regarding this information.

IF you summarize capital gains and losses from the sale of stocks on Form 8949, (without inputting every sale individually) then you send in the brokerages' detail sheet only of those sales showing the gainsand losses and the cost basis with the 8453.