new 8949 vs 1099-B

Was just reading this article about the changes for reporting stock...
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One of the things I've known about is the newly mandated reporting of cost basis.
Since I haven't received my 1099 or 8949 from Schwab for my 2011 sales, I'm wondering how they will report cost basis for securities bought a long time ago, and I have not edited my Schwab account entries to reflect the original cost basis - so it's zero -
Reply to
ps56k
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basis - so it's zero -
Schwab will continue to provide you the same consolidated statement you have always seen except that there will be 3 extra columns (so the report will be in landscape mode): Cost or Other Basis, Box 6, Wash Sale Loss Disallowed. The column called Box 6 is the equivalent to the Box 6 of the normal 1099-B. It signifies that the transaction was not a covered security. In other words, no cost basis information was sent to the IRS. Therefore, for 2011, the only transactions on the Schwab consolidated statement without an X in that column, will be your 2011 transactions for covered securities (stocks and bonds). If Schwab has your cost basis, the report will show it. If there is an X next to that transaction, the IRS did not get the cost basis.
Reply to
Alan
Was just reading this article about the changes for reporting stock...
One of the things I've known about is the newly mandated reporting of costbasis. Since I haven't received my 1099 or 8949 from Schwab for my 2011 sales,I'm wondering how they will report cost basis for securities bought a longtime ago, and I have not edited my Schwab account entries to reflect the originalcost basis - so it's zero -
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If you bought and sold a security from Schwab, they should report both the sales amount and the cost and enter them on Form 8949 as Code A.If you bought them elsewhere, Schwab will only be able to report the amountof the sale.
You are supposedto determine the cost and enter it with a code B.For something for which you get NO 1099-B, such as the sale of real estate,you should report the sale and cost and report as Code C.You could have up to six Forms 8949: Code A, B & C for long-term gains andCodes A,B & C for short-term gains.
That is what is known as tax simplification.
Reply to
Jack Schitt
For those of you who prepare returns for taxpayers that have managed portfolios and get consolidated 1099 statements that can have lots and lots of pages of transactions........
Prior to this year, if the statement was in the form of a Schedule D-1 (i.e., it contained the same information required to be entered on the Schedule D), it was not necessary for you to enter all the detail transactions from that broker. You could just enter one subtotal for the ST gains/losses and one subtotal for the LT gains/losses from the consolidated statement. The t/p was required to forward the detail pages attached to Form 8453 to that weird looking IRS address on the back of the 8453. This was possible because just about all of the large brokers who had the cost basis data, would provide the subtotals on the consolidated statement.
Schwab has informed me that their new consolidated statement will continue to have subtotals for ST and LT gains/losses. However, there will not be a ST subtotal for Code A and Code B transactions. In other words, if you want to use the 8453 method and the taxpayer has both covered and uncovered ST security transactions for 2011, you will have to add up either the Code A or the Code B transactions in order to split the ST subtotal into proper categories for entry onto the 8949. I have no doubt that other brokers will be doing the same thing.
As an aside, I have never had a taxpayer who had not sent the detail to Austin, TX, tell me that the IRS in Austin requested the detail as long as the gross proceeds on the Schedule D matched or exceeded the 1099-B data in the IRS computers.
I raise this point, because in 2011 the 8453 explicitly states that if you make the election to use this process, the 8949s will not be e-filed. This means that the e-filed 1040 would merely have subtotal entries on the Schedule D and no detail whatsoever on where those subtotals came from. The IRS will not have the detail nor will it have the 8949s. For some taxpayers, this could mean a Code A 8949, Code B 8949 and a Code C 8949.
I'm just wondering whether the IRS in Austin, TX will take a dim view of not having any line item detail.
Reply to
Alan
On one of the recent IRS webinars, the IRS representative noted that there still were a lot of "unresolved problems" with the new 8949 procedures, and he would not be surprised if they changed for next year.
Don EA in Upstate NY
Reply to
Don Priebe

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