| For tax year 2011 the capital gain reporting
requirements have changed considerably and this will
affect traders significantly. The primary
change for the taxpayer is that the IRS now requires a
new document in place of the old Schedule D-1 pages.
This is the new Form 8949. Additionally, the
Schedule D format itself has changed such that it is
essentially an entirely different reporting vehicle.
The new Form 8949 is entirely different from
the old Schedule D-1 format and in some cases taxpayers
will have to file up to three separate Form 8949
documents.
The reason for the change is to allow the IRS
to better cross-check taxpayer reported capital gains
and losses with brokerage reported figures. Along
with the taxpayer form changes, the brokerage 1099-B
documents are also changed. The brokerages begin
reporting the cost basis to the IRS where formerly they
only reported sale proceeds. Additionally, the
brokerages also report wash sale totals and the 1099 has
a new design and new boxes to report these items.
The net effect of these changes is that it
will be considerably more difficult for most active
traders to report capital gains and losses from trading
activity. The taxpayer reporting cannot be
completed until the taxpayer has access to the 1099-B
from the brokerage which is not required to issue until
February 15th. The reason that the taxpayer cannot
prepare their reports earlier is because the taxpayer
must use a separate Form 8949 for those items where the
brokerage reported the cost basis and yet another for
those items where the brokerage did not report the cost
basis. Additionally, the wash sale items must be
coded and reported on the form and that total should
cross-check against the broker reported total or the
variance should be explained.
The good news for our customers is that we
have already changed our software and processing methods
to accommodate the changes. We can produce
accurate, picture perfect Form 8949 documents which
conform to the IRS requirements.
We will still do this at a flat fixed fee,
however, because items now must be cross-correlated and
categorized against several more reported figures from
the brokerage, in order for us to quote the price we
will need to receive the 1099-B (or at least the figures
therefrom) as well as a Realized Gain Loss Report from
the brokerage. After initial checking to make sure
results will cross-check we will quote you our rate.
In most cases the rate should be between 19.95 and 49.95
depending upon the additional human intervention
involved in completing the files.
As always, we will strive to make the process
as simple and as inexpensive as we can; and your
satisfaction is guaranteed!
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