New Schedule D and 1099-B/Form 8949

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DiscoBunny1979
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New Schedule D and 1099-B/Form 8949

Post by DiscoBunny1979 »

I made quite a few trades this year and have decided to go online to the IRS website to download a few forms and read up on the new changes. My question, if anyone knows, is whether I will be receiving an individual 1099-B for each stock sale I made in 2011 (about 24 of 'em)? Are firms required to send the 1099-B through snail mail, or will most just make them available online? It seems to me that this requirement adds to the paper work.
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HueyLD
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Re: New Schedule D and 1099-B/Form 8949

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pjstack
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Re: New Schedule D and 1099-B/Form 8949

Post by pjstack »

According to the thread, "Vanguard answers your questions on basis" none of the 2011 Vanguard mutual fund trades have had their basis reported to the IRS.
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OhioGozaimas
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Re: New Schedule D and 1099-B/Form 8949

Post by OhioGozaimas »

Each investment firm you dealt with usually will provide their own version of a 1099, with all their 2011 activity on it ( -B, -INT, -DIV, etc.).

You may wind up with as many as three 8949's: one-each for columns (a) and (b) for 1099-B reported sales, plus perhaps one more for any (c) transactions you may have.

The column totals from 8949's are then moved to Schedule D. While this looks and sounds more involved, actually, once you are used to it, I think it is easier/clearer than the old Schedule D/D-1 method...
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HueyLD
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Re: New Schedule D and 1099-B/Form 8949

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tomd37
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Re: New Schedule D and 1099-B/Form 8949

Post by tomd37 »

Oh, AARP Tax-Aide is going to be fun this year...... :confused
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OhioGozaimas
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Re: New Schedule D and 1099-B/Form 8949

Post by OhioGozaimas »

HueyLD is correct: There's short and long, times (a), (b) and possibly (c).

Short-term goes on the front of 8949 (Part I/Page 1), longs go on the back (Part II/Page 2). So, there may be as many as three sheets of 8949, up to six sides...
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theduke
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Re: New Schedule D and 1099-B/Form 8949

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tomd37 wrote:Oh, AARP Tax-Aide is going to be fun this year...... :confused
It's not a problem. You just list all of them on the Capital Gains Worksheet and the software fills out the 8949's. I'm going through my training now.
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Re: New Schedule D and 1099-B/Form 8949

Post by jebmke »

theduke wrote:
tomd37 wrote:Oh, AARP Tax-Aide is going to be fun this year...... :confused
It's not a problem. You just list all of them on the Capital Gains Worksheet and the software fills out the 8949's. I'm going through my training now.
Yes, it isn't as complicated as it appears.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
ourbrooks
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Re: New Schedule D and 1099-B/Form 8949

Post by ourbrooks »

Something that may make life easier is that TurboTax, and I presume, other tax software, now claims to be able to import 1099-B, 1099-DIV and 100-R forms directly from Vanguard, starting January 13th.
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Re: New Schedule D and 1099-B/Form 8949

Post by tomd37 »

Jebmke,

I am working my test questions this morning and am about to start the advanced scenario questions and that is where I expect to see the use for Form 8949. Our district training starts tomorrow morning. Regards,
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Re: New Schedule D and 1099-B/Form 8949

Post by abuss368 »

Certain securities are covered over time. You can find much information on this implementation and phase in at http://www.vanguard.com

In training this past Friday, we studied the changes and new reporting requirements with both the Schedule D and the 8949.

Tranasactions will no longer be reported on Schedule D regardless of being covered or not. All tranascations are now reported on Form 8949 which will total to Schedule D. You should consider http://www.irs.gov to print and review the new forms.
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DiscoBunny1979
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Re: New Schedule D and 1099-B/Form 8949

Post by DiscoBunny1979 »

Unfortunately, I can not use any software unless it allows for the division of Community Property reporting in regards to Domestic Partnerships. The Federal Government requires reporting of all income as divided equally between Partners and therfore any software used would have to understand the ruling by the IRS that requires Domestic Partners in a community property state to divide income earned from ALL sources as 50/50. Does turbo tax allow for such division of dividends or gains for a community property situation such as a jointly owned trading account's dividends and captial gains would be divided equally between partners . . . showing the relationship between them, not as spouses? While I may elect to only file the 'dividends' or 'gains' under the social security # used on the account (the first name on a joint account), I still have to divide equally all other income. Therefore, the question about turbo tax actually is whether it allows for such division of income (50/50) among domestic partners for IRS reporting.

I'll just have to wait to see what I get in terms of 1099-Bs and what kind of basis versus proceeds is listed. But it's my understanding that an individual 1099-B is suppose to be given for EVERY transaction. For instance . . . I buy 100 shares of Apple on 10/30 and another 100 shares on 11/30 and then sell all 200 shares on 12/30. From my reading of things, a seperate 1099-B is to be isssued for each completed sale (one for the buy on 10/30 and sale on 12/30 AND another for the buy on 11/30 and the sale on 12/30) because the cost basis would be different and therfore the gain/loss would be different for each. The 1099-B on the IRS website (example) only allows for one transaction date, not "VARIOUS" which use to be allowed on the old Schedule.

Or for instance I buy and sell various stocks throughout the year. . .in order for there to be a 1099B subsitute that would add up all the basis and then add up all the proceeds . . . the dates on the 1099B would be "various" which probably would defeat the whole intention on detailing the exact transactions.
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HueyLD
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Re: New Schedule D and 1099-B/Form 8949

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Re: New Schedule D and 1099-B/Form 8949

Post by jebmke »

tomd37 wrote:Jebmke,

I am working my test questions this morning and am about to start the advanced scenario questions and that is where I expect to see the use for Form 8949. Our district training starts tomorrow morning. Regards,
Yes, it is in the advanced section. The 8849s all feed off one Cap Gains Worksheet which makes it relatively painless. We start tomorrow as well. Haven't seen anything final from the IRS on the column labeled "Code" so we have just been ignoring that for now.

rgds,
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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HueyLD
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Re: New Schedule D and 1099-B/Form 8949

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Re: New Schedule D and 1099-B/Form 8949

Post by jebmke »

HueyLD wrote:
jebmke wrote:Haven't seen anything final from the IRS on the column labeled "Code" so we have just been ignoring that for now.
See page 10 of Schedule D Instructions for all the updated codes.
Thanks. These were only in draft mode a few weeks ago. They must have finished them.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: New Schedule D and 1099-B/Form 8949

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DiscoBunny1979 wrote:Unfortunately, I can not use any software unless it allows for the division of Community Property reporting in regards to Domestic Partnerships. The Federal Government requires reporting of all income as divided equally between Partners and therfore any software used would have to understand the ruling by the IRS that requires Domestic Partners in a community property state to divide income earned from ALL sources as 50/50. Does turbo tax allow for such division of dividends or gains for a community property situation such as a jointly owned trading account's dividends and captial gains would be divided equally between partners . . . showing the relationship between them, not as spouses? While I may elect to only file the 'dividends' or 'gains' under the social security # used on the account (the first name on a joint account), I still have to divide equally all other income. Therefore, the question about turbo tax actually is whether it allows for such division of income (50/50) among domestic partners for IRS reporting.
I am not sure that I understand the premise of your question. You report your income; your partner reports theirs. If you get a dividend for $100 under your social security number, you report $100, then write nominee and $50 below, and subtract. I don't know of any software that won't let you type in numbers as you choose.
If you received ordinary dividends as a nominee (that is, the dividends are in your name but actually belong to someone else), include them on line 5 of Schedule B (Form 1040A or 1040). Several lines above line 6, put a subtotal of all dividend income listed on line 5. Below this subtotal, enter “Nominee Distribution” and show the amount received as a nominee. Subtract the total of your nominee distributions from the subtotal. Enter the result on line 6.
If you received a capital gain distribution or were allocated an undistributed capital gain as a nominee, report only the amount that belongs to you on Form 1040A, line 10; Form 1040, line 13; or Schedule D (Form 1040), line 13, whichever is appropriate. Attach a statement to your return showing the full amount you received or were allocated and the amount you received or were allocated as a nominee.

File Form 1099-DIV with the IRS. If you received dividends as a nominee in 2011, you must file a Form 1099-DIV (or Form 2439) for those dividends with the IRS. Send the Form 1099-DIV with a Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to your Internal Revenue Service Center by February 28, 2012 (April 2, 2012, if you file Form 1099-DIV electronically). Give the actual owner of the dividends Copy B of the Form 1099-DIV by January 31, 2012. On Form 1099-DIV, you should be listed as the “Payer.” The other owner should be listed as the “Recipient.” You do not, however, have to file a Form 1099-DIV to show payments for your spouse.
Or are you focusing on the last sentence and want not to file a Form 1099-DIV to show payments to your partner?

My own experience was with a W-2 when married filing separately. The W-2 came, we divided it according to the community property laws, and we each reported our own income. The income reported didn't match the W-2, but the income reported matched the law. We attached explanations, the IRS ignored them and wrote us letters saying our numbers were wrong, we wrote back and said no they aren't, and the IRS then wrote back and said "never mind."
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Re: New Schedule D and 1099-B/Form 8949

Post by Muchtolearn »

It is a shame that they did this. Any person who hand files, and many could in the past, with simple forms, are now forced into up to 6 additional forms and all confusion. All of this to help support a new health care law. Very sad.
MarkNYC
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Re: New Schedule D and 1099-B/Form 8949

Post by MarkNYC »

There is another change to the 2011 Schedule D instructions. Prior to 2011, if a taxpayer sold their principal residence, the IRS instructions were to NOT REPORT the sale on Schedule D unless there was a gain that was not fully excludable. For 2011, the sale must be reported on Schedule D/Form 8949 if some of the gain is taxable, OR if a Form 1099-S was issued for the sale. For some reason, the IRS decided not to include this change in the "What's New" section of the instructions to Schedule D. I never have understood the IRS rationale for previously instructing that the sale of a principal residence should be omitted from the tax return based on the taxpayer's determination that there should be no taxable gain on the sale.
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HueyLD
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Re: New Schedule D and 1099-B/Form 8949

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sscritic
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Re: New Schedule D and 1099-B/Form 8949

Post by sscritic »

HueyLD wrote: "If you sold or exchange your main home at a gain, must report the sale or exchange on Form 8949, AND can exclude some or all of the gain..."
Ah, English and the importance of the serial (Oxford) comma.

"If A, B, and C" means that all three have to be true before the "if" is true. The question is when is "must report the sale or exchange on Form 8949" a true statement?

Now look at page 2
Report the sale or exchange of your main home on Form 8949 if:
• You cannot exclude all of your gain from income, or
• You received a Form 1099-S for the sale or exchange.
So if you can exclude all your gain and you did not receive a Form 1099-S, then you don't have to use Form 8949, i.e., you fail the "must" test.

At least that's how I read English. I also think that is what Mark said, although he phrased it from the when do you have to file (as on page 2):
the sale must be reported on Schedule D/Form 8949 if some of the gain is taxable, OR if a Form 1099-S was issued for the sale.
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Re: New Schedule D and 1099-B/Form 8949

Post by Epsilon Delta »

I don't believe there are any penalties for filing excess forms, unless you rise to the level of a tax protester.
Thus I would spend very little time parsing the instructions, if they are not clear I'd file the 8949 for the home sale and be done with it.

By the way I expect that the IRS does not mention this as a change because the instructions are intended for individuals. Very few people sell houses in consecutive years, Since they don't know what the rules were last year the fact that they have changed is just noise.
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Re: New Schedule D and 1099-B/Form 8949

Post by MarkNYC »

Epsilon Delta wrote: By the way I expect that the IRS does not mention this as a change because the instructions are intended for individuals. Very few people sell houses in consecutive years, Since they don't know what the rules were last year the fact that they have changed is just noise.
Aren't tax form instructions intended for tax preparers as well as individuals? A change to filing instructions is not "just noise" to the tens of millions of people who pay to have their tax returns prepared and expect them to be prepared correctly, and it's not just noise to those who are paid to prepare returns and are expected to know what's reportable and what isn't. If a tax preparer had a client who sold a principal residence in 2010, should the preparer just assume the reporting rules are the same for another client who sold in 2011? Is it not in the public interest for the IRS to make an effort to inform both individuals and tax preparers about a change in filing requirements regarding a transaction that always involves large dollars - like the sale of a house?
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Epsilon Delta
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Re: New Schedule D and 1099-B/Form 8949

Post by Epsilon Delta »

Most tax preparers have continuing education requirements. My assumption is that the trainers use their own materials rather than IRS pubs. I believe we have several trainers in the forum, perhaps they could tell us if they base their courses on the IRS pubs.
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Re: New Schedule D and 1099-B/Form 8949

Post by MarkNYC »

Epsilon Delta wrote:Most tax preparers have continuing education requirements. My assumption is that the trainers use their own materials rather than IRS pubs. I believe we have several trainers in the forum, perhaps they could tell us if they base their courses on the IRS pubs.
,

A couple of points:

First, I never mentioned the use of "IRS pubs." You may be confusing IRS publications with IRS instructions for preparing a tax form or schedule. They are not the same thing.

Second, Form 8949 is a new form for 2011. The only way for anyone to know how to prepare the form correctly is to read the IRS instructions to the form. If a CPE trainer is to teach the proper preparation of the form, then he must first read the instructions.
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Re: New Schedule D and 1099-B/Form 8949

Post by runner26 »

DiscoBunny1979 wrote: Does turbo tax allow for such division of dividends or gains for a community property situation such as a jointly owned trading account's dividends and captial gains would be divided equally between partners . . . showing the relationship between them, not as spouses?
There is a new form 8958 starting with this tax year that must be filed to show division of property. Turbo tax says it is not available yet because the IRS is still changing it, but will have it soon. Tax Act has it, but their instructions don't seem to follow general guidance for reporting of same-sex income, and are somewhat confusing.
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Re: New Schedule D and 1099-B/Form 8949

Post by runner26 »

runner26 wrote:
DiscoBunny1979 wrote: Does turbo tax allow for such division of dividends or gains for a community property situation such as a jointly owned trading account's dividends and captial gains would be divided equally between partners . . . showing the relationship between them, not as spouses?
There is a new form 8958 starting with this tax year that must be filed to show division of property. Turbo tax says it is not available yet because the IRS is still changing it, but will have it soon. Tax Act has it, but their instructions don't seem to follow general guidance for reporting of same-sex income, and are somewhat confusing.
Turbo Tax has now pushed back release of 8958 another week to Feb. 7.
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runner26
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Re: New Schedule D and 1099-B/Form 8949

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runner26 wrote:
DiscoBunny1979 wrote: Does turbo tax allow for such division of dividends or gains for a community property situation such as a jointly owned trading account's dividends and captial gains would be divided equally between partners . . . showing the relationship between them, not as spouses?
There is a new form 8958 starting with this tax year that must be filed to show division of property. Turbo tax says it is not available yet because the IRS is still changing it, but will have it soon. Tax Act has it, but their instructions don't seem to follow general guidance for reporting of same-sex income, and are somewhat confusing.
Forget turbotax it's a mess with 8958. I have messed with it for hours and can't get it to look right. Turbo can't handel community property pensions. TaxAct was a breeze and in spite of getting turbo for free, I prefer to pay for TaxAct.
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Re: New Schedule D and 1099-B/Form 8949

Post by runner26 »

It took until March for TurboTax to get form 8958 workable so that you could put together you taxes properly, (the forums demonstrate the agrivation of it's customers). Luckily I filed paper forms using TaxAct, and in spite of the projected time to process paper, I have already received my refund.
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