> I got a notice from the IRS for 2005 for discrepancies on my
>> Schedule D. I looked at it and it turns out I had sold short
>> shares that were not covered until 2006 and therefore did
>> not need to be reported on my D (but were reported by my
>> brokerage on the 1099).
>>
>> My question is is it a requirement to include a statement
>> explaining this or is it just smart to avoid getting the
>> letter (and hassle) later? I looked in Pub 550 and didn't
>> see anything stating this was a requirement (or even
>> suggesting to do it).
> Pub 550 used to be more exacting, and more helpful
>
> The best I could find this year is a Pub 550 statement right
> in the middle of page 67 that says Emily reconciles the
> Schedule D Sales columns and makes sure they are not less
> than the reported amounts of the 1099Bs.
>
> Then you can use your memory of what the Pub or the Schedule
> D instructions used to say, and attach a statement when the
> 1099Bs are more than the Sales Price columns.
>
> But when you have short positions remaining open at year
> end, just say so right on the schedule D.
>
> I do this by entering "Short position remaining open
> 12/31/06" on the line below the report of the short sale.
I guess what I am wondering is do I have to amend my 2005 return or just let them know the difference was due to open short positions? I notified them already but did not amend my return.
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