What documentation to include with schedule D

Question

I have prepared my returns for several years, but had an accountant do it this year.

I always listed each brokerage account (I have 5) in Schedule D for long and short term, and included copies of the supplemental data for each account which gave the details. For my state return (NY) I only included a copy of the Federal sched D, without the supplemental data; because that is how my accountant did it years ago, so I figured it was the proper way.

This year I see my accountant included the supplemental data with both federal and state returns, eventhough he is filing electronically. Will anyone (short of an audit) ever see the supplemental data; is it sent in electronically also?

I am doing my two sons returns, and it got me to wondering if the supplemental data needs to be sent in with their returns or not; Federal and NYS.

NYS has never complained about the way I did it for 25 years, but that is not proof they approve of it.

Thanks.

Barry Margolin · Accepted Answer

The tax agencies just want the information that you enter on Schedule D: date acquired, cost basis, date sold, gross proceeds, capital gain/loss. Any supplemental data your broker provides is just for your benefit, the government doesn't care. You could save it in the event of an audit, although it should duplicate they provided when you actually bought and sold the stock.

Don Priebe · Answer

On an e-filed federal return, paper supporting documentation is sent in with an 8453 form as a "cover letter". I don't know if anyone ever reads it.

There is no way to send in any paper supporting documentation on an e-filed NY return, as NY accepts only PIN filing and has no equivalent to the Federal 8453 form. I asked the NY "outreach" person about this at a seminar last fall - she said that was by design.

Harlan Lunsford · Answer

You mean, then, that for NY state one must enter ALL 437 trades?  Zounds!ChEAr$,Harlan

Don Priebe · Answer

No.  NY gets your Schedule D which says something like "See attachment" and has the totals on it, they just don't get the attachment!  And they're happy.

What documentation to include with schedule D

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