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Using Form 8453 properly

I have a bad debt. 453 says to enter it on 8949 and attach a statement explaining it in detail. Turbotax says 8453 can be used for the statement. The instructions for 8453 say file the tax return electronically, and then mail form 8453. That seems simple enough, but...

Form 8453 also says: Form 8949, Sales and Other Dispositions of Capital Assets (or a statement with the same information), if you elect not to report your transactions electronically on Form 8949

This is confusing. I have to enter it on 8949, but I also want to provide the detailed explanation on 8453. Is that okay, or is 8453 NOT for the explanation of the bad debt on 8949?

Reply to
Wade Lippman
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Assuming you actually have a bad debt (you need to read the rules carefully as to when a debt is considered worthless for tax purposes), you enter it on Form 8949 with box C or F checked. You need to attach a statement to the return explaining the bad debt. Most software (at least professional grade software) allows for the attachment of explanatory statements to an e-filed return. If, and only if, your software does not provide for attached statements, you use Form 8453 as a cover sheet to attach various explanatory statements. You do not send your Form 8949 with the 8453 if it is already part of your electronic submission. The comment about including the full 8949 with Form 8453 is for people like daytraders who don't want to enter all of their transactions individually on Form 8949. They can enter a summary line on Form 8949 and send the broker's 1099-Bs as a paper attachment to Form 8453.

Ira Smilovitz, EA Leonia, NJ

Reply to
ira smilovitz

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