Multiple Stock Transactions

[Black Bart]

Maybe a poll will help (if I can remember how...)

You can punch in more than one answer if you want to.

[DTS]

My vote

Well Bart, I guess you can see how I voted on my two answers. There is no privacy in this.

Dennis

[S T]

Discussions on Schedule D

After all of the discussions, and posts, my vote is to list all transactions on Schedule D, even though I "whine" about it.

I just don't see how we as preparer's can be in compliance without listing all transactions.

Besides, I have found errors in the broker realized gain/loss reports which very easily could have lead to understatement/overstatement of gain/loss. One would never know without entering line by line and balancing at the end to the 1099B.

Sandy

[Anarchrist]

I have found errors in the broker realized gain/loss reports which very easily could have lead to understatement/overstatement of gain/loss. One would never know without entering line by line and balancing at the end to the 1099B.

You don't have to enter every line to find errors in the broker's report. Most errors consist of missing info. Those are easily corrected with additional entries on the sch D. The statement can still be attached for the items that are correct. I've rarely needed more than 3 or 4 lines.

[DonPriebe]

Having it both ways

On occasion I've scanned the brokerage statement and run it through OCR to make an Excel spreadsheet. Once it's there you can check that the totals are correct, move the columns around, etc. And if I were running Drake I could import it into the Schedule D.

At a minimum I scan the brokerage statement and use Acrobat to put a heading (client name, SSN, page x of x) on each sheet.

An interesting side note on NY e-files -- they have explicitly said that although they want a copy of the D in the e-file, they do NOT want a copy of any paper attachments that were sent to the IRS with an 8453. Which is good since there is no state equivalent to the 8453.

[JohnH]

One type of error in the gain/oss statement from financial advisors occurs when a stock which was "transferred in" from a prior brokerage is sold. The former advisor didn't furnish any cost basis, so the new advisor just shows a zero basis, with the entire sales price being shown either as a gain or as an "unknown" line entry. Nobody in the process has any incentive to get it right, since the former advisor is losing a client and the new one is just focusing on getting the churning process under way to generate new transaction fees.

I'm not generally one for increased regulation, but this is one case for which I make an exception. I believe advisors should be subject to heavy fines for failing to provide basic cost basis information when clients transfer out, and acquiring advisors should be prohibited from transferring accounts in without obtaining that info.

[Bees Knees]

I voted for numbers 1, 6, 8, and 9.

The taxpayer is liable for penalties as well as the preparer for not following Schedule D instructions.

[Bees Knees]

I’ll explain my position one more time…

Schedule D instructions say the substitute must contain the same information and in a similar format.

I don’t want to find out the hard way my interpretation of a substitute statement is not the same interpretation that IRS has.

To me, it is very embarrassing as a professional when I am caught making a mistake on a client’s return, thus causing the client hassle and penalties. My reputation as a knowledgeable and accurate preparer is more important to me than trying to save a few minutes or a few bucks. I would rather lose a client because I am too nit picky with the rules, than lose a client because I am sloppy and try to cut corners. Our clients talk about us to other people. And I don’t believe those conversations are limited to the fees we charge.

[snowbird]

I’ll explain my position one more time…

Schedule D instructions say the substitute must contain the same information and in a similar format.

I don’t want to find out the hard way my interpretation of a substitute statement is not the same interpretation that IRS has.

I wonder if the IRS and/or the various organizations (AICPA, NAEA, NATP, etc) have ever taken a stab at getting the brokerage houses to produce a statement in a "similar format"? It would save brokers' clients money and grief. I have seen several statements where the information was there , including cost basis, but the columns were not in order .... just wrote above the column headings ... a,b,E,c,d,etc. Most reports are written by IT professional who have no idea why they are writing it or how it may be use.

[Burke]

I deal with many of the big name brokerage houses in my town. They listen to your input, as it certainly saves them time during tax season when all the proper information is present and in a format the IRS (and we) can review. I have often told one or the other that "so-and-so's" statements are superior, and one broker asked me this year how I liked theirs, as they had worked hard over the previous year to reformat and improve it. I had an amended return this year (saved big bucks) for an elderly lady who had her return done by HRB in 2006, and who only used the Wachovia Securities realized-gain loss statement for input on Sche D (which did not include any stocks sold for which they had no basis). HRB did not reconcile it with the 1099B which showed all sales proceeds. Am in the process now of updating basis on all her holdings for the broker, some dating back to 1988. The broker could have done this herself, but I'm getting paid for it.

[Donald Rihn, EA]

Many entries

Most of the time I enter each item separately.

And I answered the poll as such.

But, once or twice during tax season, as the Apr 15th deadline loomed, I always encounter a massive list of transactions that would be impossible to list separately. For those I just separate the short term from the long term, enter various for dates and haven't had one kick back yet.

But, to provide a professional service and a professional looking tax return, for which I charge, I will list the transactions in detail.

The same applies to 4797 entries for raised or purchased breeding cattle sold in a group of more than one. I list each separately.

[Black Bart]

Having it both ways.

Most of the time I enter each item separately...(if) during tax season...I...encounter...massive...transactions... I...separate the short term from the long term, enter various for dates and haven't had one kick back yet...

I've done it like this for many years.

"So far, so good!" -- Man falling from skyscraper as he passed each floor.

[Lion]

Type them in...

Years ago I was more willing, especially for late-comers, to type in summaries for each account and not send any attachments. Then I had a guy with 4400 trades, mostly wash sales, who I charged royally for creating an Excel spreadsheet to attach. I also had a gal with four or five accounts, each with nearly 100 double-sided pages from her broker. Used to do the summary for each account. One late night my manager was in doing a big Schedule D and watching me and telling me I had to type each trade. Well, I did that year. In future years, I went back to the summary for each account but started attaching the brokerage statements if they contained all the needed information. Usually, I had to type in everything for one of the accounts but could attach the others. Her brokerage gets $25,000 for managing her accounts, so I don't feel bad about charging her for entering her data for tax purposes. Of course, we're the ones who hear the complaints about our fees! I do work with the brokers as much as I can to get good information. I don't mind typing in hundreds of transactions, it's thousands that mean I probably can't get what it's worth and would be more efficient preparing other returns. I haven't worried if the brokers' columns aren't in the same order, but if I'm creating an Excel spreadsheet myself, then I make sure it matches a D-1.

[OtisMozzetti]

1099B with supplemental purchases information

One problem type consists of a new client who walks in with a 1099B that also has supplemental information describing purchases during the year. Unfortunately, though, each buy or sell for, say 3200 shares, is often shown as split into 6 different pieces all on the same day, the same commission and the same buy/sell order for the brokerage client. With 50, 100, 200 transactions, it falls on the preparer to find out whether shares were carried over from prior year purchases, or still owned in the next year, or involved with wash sales possibly extending over the boundary of a year. The inventory of shares for any given stock can require a lot of matching up of lots and numbers of shares. With one client in his 70's, he had a few million of gross proceeds and a broker's tabulation of $100,000 more purchases than the proceeds during the year. Only AFTER I searched through and thought about all of the numbers of shares bought and sold (or NOT sold!) did he recall that he still owned about $250,000 of the Boeing stock after the end of the year. Otherwise, he would've claimed a capital loss of $150,000.

One thing which I do not worry about, i.e. ignore, consists of wash sales where the inventory of shares started at zero, and ended at zero, during the same year.

[fliszt]

Some times

it takes more than an hour to enter all the data. But that's what I do. But, I also charge the client for "time" when filling out the D.
And I agree that it would be very helpful if all finance companies would come up with a standard form to use AND include cost data. I find so many companies do not include the cost data which is irksome, because they know we are going to need it.

I would also like a standard format for ESOP and ESPP reports. This one really baffles me.

Larry