Schedule D instructions

[Taxfun]

On another board it was noted that there is an apparent conflict in the Schedule D instructions whether, or not, it is permissable to attach a schedule where there are multiple trades. On Page D-3 it says its okay, whereas in page D-6 it says its not. We commonly attach a schedule in the Schedule D format where clients have lots of trades, rather than type in each trade.

What to do this year?

[BOB W]

Schedule D

I have been told directly by an IRS employee at one of their seminars that broker's statements are not allowed, officially. I have been doing it for many years when the statement is complete, and I plan on using the broker's statements in the future as well.

Since most returns are Elf'd IRS wants each trade entered. I still maintain the broker statement for future request since I enter total S/T and L/T lines on Schedule D.

[Bees Knees]

D-3 is said in the context of reporting possible thousands of day trader transactions, but even then it says it has to be the same information in a similar format to the D-1. Page D-6 is just general Schedule D instructions for Joe average taxpayer. I think at a certain point, as long as the details of each transaction are listed with the same format as the D-1, the IRS isn’t going to squawk too much.

[DaveO]

The first time that I ran into the Day Trader problem I asked an IRS appeals officer if attaching the completed brokerage statement would be acceptable. He said as long as it was complete and in detail it would be accepted. I have also attached an Excell worksheet printout and have not had either questioned. Of course they matched the 1099B to the penny.

[JON]

Ef

So do you attach them to the 8453? Not required attachment, but who knows. Excel spresheets can be imported by most software, maybe I should change my ways and start doing it. 10 years ago in a meeting with the IRS, one of those feel good ones, I asked if we could give the Sch D by brokers. He said why not we only match totals. So since then I used only totals. Now I believe it is Rev Notice in '05 that is saying they want details.... Now does that mean they will be sending letters if they review, computer or not??

[abby]

I got this notice today...

NEWS-FEDERAL, 2006TAXDAY, (Jan. 03, 2006), Item #I.3, Form 1040, Schedule D Reporting Requirements for Capital Gains and Losses Create Controversy
Form 1040, Schedule D Reporting Requirements for Capital Gains and Losses Create Controversy


As has been typical of the past several years, the start of the filing season is not without controversy. For the 2006 season, Form 1040, Schedule D, Capital Gains and Losses, is clearly one of the flash points.



Unlike the standard instructions in prior years, recently published 2005 instructions for Form 1040, Schedule D, now require individuals to list each capital gain or loss transaction on a separate line. Those instructions specifically state, "Do not enter "see attached" and summary totals from an attachment in lieu of reporting the details of each transaction directly on Schedule D or D-1."



The American Institute of Certified Public Accountants (AICPA) complained to IRS Commissioner Mark W. Everson in a letter dated December 23 that such a requirement should be scuttled. It observed that preparers have traditionally reported the summary totals found on year-end tax reporting statements received from brokerage firms, together with a notation to "see attached" brokerage statement.



In its letter, the AICPA argued that, for the many taxpayers who are involved with scores of securities sales each year, manually listing each individual capital gain and loss transaction will create a significant burden and expense. It further points to e-filing procedures for large corporations that allow summary-form reporting.



The AICPA will be approaching the IRS early in January to "begin discussions" that would permit the reporting of capital gains and loss transactions in summary form on Form 1040, Schedule D.



An IRS spokesperson told CCH that the IRS will not comment directly at this time on the controversy or on how receptive it would be to changing the current instructions.



By George Jones, CCH News Staff