Search found 2774 matches

by FactualFran
Wed Mar 27, 2024 11:53 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

Sorry I was not aware of this post until now. The whole gain (proceeds minus purchase price) is being reported on a 1099-INT and I am able to deduct the interest using "ACCRUED INTEREST" on SCHEDULE B using my tax software. Although it will make my taxes of both Federal and State consistent with the guidelines in IRS Publication 550 and my state's memorandum (capital gain from selling T-Bill is subject to state tax), the adjustment still makes me anxious because the purpose of this adjustment (recharacterize interest income as capital gain) is not what this title indicates. If IRS sends me a letter regarding this adjustment, can I say that "2023 Instructions for Schedule B" does not provide instructions about how to han...
by FactualFran
Wed Mar 27, 2024 5:38 pm
Forum: Personal Finance (Not Investing)
Topic: Underpayment Penalty Form 2210: Actual (Vanguard) vs Estimated (Schwab) Q1 thru Q3 Annualized Income Data
Replies: 12
Views: 725

Re: Underpayment Penalty Form 2210: Actual (Vanguard) vs Estimated (Schwab) Q1 thru Q3 Annualized Income Data

With varying income from year to year, safe harbor payments can sometimes lead to dramatic overpayment in subsequent years (or underpayments). Roth conversions (if any) vary based on how annual income is shaping up towards the end of the year. I've always not withheld on Roth conversions preferring to (based on my understanding at the time) have the entire amount end up in the Roth and paying taxes out of taxable. After seeing your post I looked briefly at the process of re-introducing funds into a Roth to make up for withholdings from a conversion. Interesting. But not clear how well VG supports this and I'm generally heading towards more simplicity (and ultimately towards 4 equal safe harbor estimated payments - but that's a longer term ...
by FactualFran
Tue Mar 26, 2024 6:41 pm
Forum: Personal Finance (Not Investing)
Topic: An unintended visit from "Aunt IRMAA"?
Replies: 41
Views: 7271

Re: An unintended visit from "Aunt IRMAA"?

WeakOldGuy wrote: Tue Mar 26, 2024 4:48 pm I was very happy to see this. My 2023 IIRMA AGI is $231,749. The 0% inflation 2.0x bracket for 2025 MFJ is $232,000. :mrgreen:
Hope that the average CPI-U for March through August turns out to be at least the value of February (of 310.326) or at worst about 0.08% less.
by FactualFran
Tue Mar 26, 2024 6:26 pm
Forum: Personal Finance (Not Investing)
Topic: US obligations not included in the 1099
Replies: 12
Views: 507

Re: US obligations not included in the 1099

jeffyscott wrote: Tue Mar 26, 2024 4:26 pm If that's the reason, then why does the 1099-INT, unlike the DIV, have box 3 for reporting "interest earned on U.S. savings bonds or Treasury notes, bills or bonds"?
A possible reason why Form 1099-INT contains has a box for interest on Treasury obligations while Form 1099-DIV does not is that the Treasury pays interest but does not pay dividends.
by FactualFran
Tue Mar 26, 2024 4:01 pm
Forum: Personal Finance (Not Investing)
Topic: NY State tax treatment of Accrued Market Discount for US Treasury Note
Replies: 76
Views: 6152

Re: NY State tax treatment of Accrued Market Discount for US Treasury Note

The Instructions for Form IT-225 includes two subtraction codes with "U.S. government" in the title. S-121 Certain investment income from U.S. government agencies S-125 Interest income on U.S. government bonds The instructions for code S-125 includes Individuals, estates or trusts : Do not enter this code on Form IT-225. Enter the subtraction modification on Form IT-201, line 28, or Form IT-203, line 27, or Form IT-205, line 67, as applicable. See the instructions for the return you are filing. The federal government treats accrued market discount of Treasury debt as interest income. As far as I can tell, NY does not override that treatment for state income tax purposes, although at least one state does. Individual taxpayers shoul...
by FactualFran
Tue Mar 26, 2024 12:08 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

hghysm21 wrote: Tue Mar 26, 2024 11:32 am My Fidelity 1099-B shows proceed (1d), cost basis (1e) and market discount (1f). The market discount amt = proceed – cost basis.
Under what condition, is the market discount taxed as capital gain?
The condition is that the discount amount is less than one-fourth of 1% (0.0025) of the stated redemption price at maturity multiplied by the number of full years to maturity. It is known as a de minimis discount.
by FactualFran
Mon Mar 25, 2024 6:47 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

Merry wrote: Mon Mar 25, 2024 6:15 pm Artsdoctor and Kevin M, Indeed the missing link was correctly using column g on 8949 and Schedule D in combination with the information on the 1099-B. Thank you for pointing that out and the section I missed giving instructions related to Accrued Market Discount Adjustment for form 8949. Very helpful!
Just to be sure, does the Form 1099-B that you received from Fidelity have a value in the Accrued Market Discount column for the transaction?

There is a condition under which a purchase discount is included in the basis, and will be taxed as a capital gain rather than as income.

[edit: improved grammar]
by FactualFran
Sun Mar 24, 2024 6:43 pm
Forum: Personal Investments
Topic: Help me understand the extra work of SpecId for cost basis
Replies: 11
Views: 731

Re: Help me understand the extra work of SpecId for cost basis

Gaston wrote: Sun Mar 24, 2024 3:33 pm
cyclist wrote: Sun Mar 24, 2024 3:28 pm You bought all of your shares without having spec ID turned on. When you make the switch I believe you’ll discover that the basis for all of the shares that you already own will be averaged.
Interesting. I didn’t know that.
Government regulations about brokerages and other agents reporting the basis of sales to the IRS include the following conditions for allowing a change from average basis to re-establish the actual cost of each purchase lot. The change is done
  • within one year after electing to use Average Basis
  • before a sale, transfer, or disposition is made with Average Basis as the basis determination method.
A broker may extend the one-year period but not beyond the first disposition.
by FactualFran
Sat Mar 23, 2024 12:55 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

There seems to be a misunderstanding of the 4% SWR "rule" by a lot of people on this thread. Each year will have its own SWR. We don't know what it is a priori. We just know that historically, 4% was a SWR 95% of the time. The success rate depends on the portfolio and the data used. Using the historical data in an Stocks, Bonds, Bills, and Inflation Yearbook, with data starting for the year 1926, William Bengen found that portfolios of stocks and intermediate-term government bonds with allocations of 50:50 and 75:25 supported at least 30 years of inflation-adjusted withdrawal when the initial rate was 4%. A success rate of 100%. If an initial withdrawal rate of 4% always works for the target number of years of withdrawals, such a...
by FactualFran
Fri Mar 22, 2024 11:43 pm
Forum: Personal Finance (Not Investing)
Topic: Capital gains loss carryover if you sell no stocks
Replies: 16
Views: 1258

Re: Capital gains loss carryover if you sell no stocks

Excuse my concern about the word "can" in the opening post.

Up to $3,000 of net capital loss for a year are to be reported on Form 1040. That loss reduces the adjusted gross income for the year. The net capital loss for a year includes losses carried over from the income tax return for the previous year. Those who prepare an income tax return should follow the instructions for the forms involved, such as Schedule D whose instructions include a worksheet that calculates the net capital loss to be reported on Form 1040.
by FactualFran
Fri Mar 22, 2024 11:26 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

So, do you believe that 4% is some immutable law, or that we just don't have enough samples yet to have seen a failure (based on Bengen's allocations)? That was addressed in a previous post to this topic. If you believe the underlying probability really uis 100%, then you are right, ratcheting up would work fine. I do not know of a statistical distribution of investment returns that is sufficiently accurate for meaningful probabilities to be calculated from it. But, if you allow for the fact that the actual risk is greater than 0% (however small that may be) then ratcheting certainly will increase that small risk. Might still be acceptable level of risk, but it certainly increases. That was addressed in another previous post to this topic.
by FactualFran
Fri Mar 22, 2024 7:38 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

marcopolo wrote: Fri Mar 22, 2024 5:34 pm There are plenty of other studies that show 4% WR having about 95% success rate, with a few failures for start years in the 1960s.
Those other studies used different portfolios than Bengen. An important difference is the type of bonds. An obvious conclusion to draw is, for a withdrawal portfolio, intermediate-term government bonds that Begen used have been a better choice than the type of bonds used by other studies.

A post in the "30/70 or 60/40: Does it make a difference to the 4% rule" topic has a graph of the initial withdrawal rate that has been supported at least 30 years of annual inflation-adjusted withdrawals for different types of bonds, using return data from a Stocks, Bonds, Bills, and Inflation yearbook.
by FactualFran
Fri Mar 22, 2024 5:04 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

That depends on if you believe 4% is 100% safe. See my more detailed post aabove. Calculation done by Bengen around 1993 showed that an initial withdrawal rate of 4%, with later withdrawals amounts adjusted for inflation, would not have depleted portfolios sooner than 30 years for any starting year back to 1926, with the 50:50 and 75:25 stock:bond portfolios that he used. He used returns from a Stock, Bonds, and Bills (SBBI) yearbook. Doing the same type of calculations including more recent returns from a later SBBI yearbook, show that an initial withdrawal rate of 4% has continued to be safe for moderate and aggressive allocations to stocks and intermediate-term government bonds. It is not a matter of belief. It is result of calculations...
by FactualFran
Fri Mar 22, 2024 2:50 pm
Forum: Personal Investments
Topic: Cost Basis question when sell all shares of mutual fund
Replies: 19
Views: 1458

Re: Cost Basis question when sell all shares of mutual fund

If all shares are sold, the cumulative gain/loss will be the same for different basis methods. However, if some of the shares are short-term and some are long-term, how much of the gain/loss is allocated between the different term lengths depends on the basis method.

In addition, if all shares are sold over multiple years, the cumulative income tax paid depend on the tax rate of each year.
by FactualFran
Fri Mar 22, 2024 2:35 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

The 1964 retiree might disagree with you. They would have made it if they stuck with their original 4% (inflation adjusted). But, re-starting in 1966 resulted in failure. That depends on whether supporting at least 30 years of withdrawals would be considered to have been a failure and what the portfolio was. Using historical data, William Bengen determined that at least 30 years of inflation-adjusted withdrawals would have been made when the initial withdrawal rate of 4%, with a 50:50 portfolio of stocks and intermediate-term government bonds. Including more recent data that Bengen did not have, the portfolio would have supported 44 years of inflation-adjusted withdrawals for 1964 as the starting year with an initial withdrawal rate of 4%....
by FactualFran
Fri Mar 22, 2024 12:59 pm
Forum: Personal Finance (Not Investing)
Topic: tax brackets etc assuming TCJA sunset no new laws
Replies: 31
Views: 3574

Re: tax brackets etc assuming TCJA sunset no new laws

SpideyIndexer wrote: Fri Mar 22, 2024 12:15 am Just to clarify, you are disagreeing with fyre4ce's bracket estimates?
I get slightly different results for what the 2024 brackets would have been for the older rates with the adjustment for inflation based on the C-CPI-U. I have the results for only the filing status of single.

10% up to $11,325
15% up to $47,050
25% up to $113,900
28% up to $237,600
33% up to $516,500
35% up to $518,650

[edit: corrected taxable income thresholds, most were missing a year of inflation adjustment]
by FactualFran
Thu Mar 21, 2024 8:02 pm
Forum: Personal Finance (Not Investing)
Topic: NY State tax treatment of Accrued Market Discount for US Treasury Note
Replies: 76
Views: 6152

Re: NY State tax treatment of Accrued Market Discount for US Treasury Note

I have received a response from someone who MAY be a tax attorney that AMD in the case I gave is NOT exempt from state income tax, and his response seemed to imply that is the case with AMD in all states. Is he correct? I don't know. Was that the post in https://forum.freeadvice.com/threads/ny-state-tax-treatment-of-accrued-market-discount-for-us-treasury-note.663939/#post-3799048? The answer was that accrued interest was not interest from the Treasury, but that doesn't answer whether accrued market discount is interest from the Treasury for NY tax purposes. If "interest which is paid by the US government to the holder of the bond" is the standard for interest not being subject to state and local income tax, then accrued interest...
by FactualFran
Wed Mar 20, 2024 5:59 pm
Forum: Personal Consumer Issues
Topic: Dark Chocolate heads Rejoice !!!
Replies: 198
Views: 31153

Re: Dark chocolate addicts: how much do you eat?

core4portfolio wrote: Wed Mar 20, 2024 4:00 pm
FactualFran wrote: Tue Jan 11, 2022 8:48 pm
untouchablePORD wrote: Tue Jan 11, 2022 6:37 pm Interesting. What would you recommend?
Trader Joe's 85% Single Origin Uganda Bar. However, it is a matter of personal preference.
+1
Unfortunately, Trader Joe's has stopped selling them. A not as dark alternative is Trader Joe's Fair Trade Organic 72% Cacao Belgian bar.
by FactualFran
Wed Mar 20, 2024 5:55 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

Here's an excerpt from my 1099-B. Schwab is correctly treating the gain (proceeds minus cost) as ordinary interest income up to the accrued market discount. Because the accrued market discount is more than the gain, all of the gain should be taxed as income and there should be no capital gain or loss. There should be no need for you to adjust any of the values on the Forms 1099-B. If I had received those transactions on a Form 1099-B, I would report the values as-is in the following columns of a Form 8949: Description of property, Date acquired, Date sold, Proceeds, Cost or other Basis. With other columns of Form 8949, in the Adjustment code column I would put a "D" and in the Accrued market discount column I would put the negati...
by FactualFran
Wed Mar 20, 2024 3:49 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

I had already formatted the below table for the ratable method. The last two columns are per my calculations. acquired days to sold days proceeds cost/basis market Schwab AMD actual AMD short term CUSIP qty Mature Box 1b maturity Box 1c held Box 1d Box 1e discount Box 3f (ratable) loss 912828X70 25 04/30/24 10/28/22 549 08/07/23 282 $24,400.39 $24,079.61 $920.39 $320.78 $472.77 ($151.99) 91282CCN9 50 07/31/23 10/28/22 275 06/02/23 216 $49,592.12 $48,391.11 $1608.89 $1201.01 $1263.71 ($62.70) NOTE: Schwab 1099-B 'acquired date' (Box 1b) is the trade date. Per Pub 550, 'days to maturity' and 'days held' should be based on day after the trade date, which I take to mean settlement date (trade date + 1 business day). Since 10/28/22 was on a Fri...
by FactualFran
Wed Mar 20, 2024 1:30 pm
Forum: Investing - Theory, News & General
Topic: Reset 4% withdrawal floor if portfolio increases in value?
Replies: 93
Views: 8019

Re: Reset 4% withdrawal floor if portfolio increases in value?

What the OP is proposing is that when you are above 95% probability of success you reset back down to 95%(-ish, rising over time due to shortening time horizon) but when you are below 95% you don't reset back up to 95%. You are increasing the risk of ending up well below 95% forward probability because you're never starting any sequence of returns from a higher probability position. Where did the OP state anything about a 95% probability of success? The OP appears to be take it that an initial withdrawal rate of 4% with later withdrawal amounts adjusted for inflation always results in the portfolio lasting a desired number of years, such as 30. That is a result determined by William Bengen using historical data from 1926 through 1992 (the ...
by FactualFran
Wed Mar 20, 2024 11:50 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

ginahoy wrote: Wed Mar 20, 2024 1:01 am I checked both methods, as well as ruled out the de minimis exclusion, and the difference is significant: Schwab reported $1522 for box 3f, but my calculated AMD is $1736 for ratable method and $1753 for constant yield method (totals for two different CUSIP's).
...
Please post enough details so that others can do the calculations and post the accrued discount they get. The important details for each issue are: settlement date for the purchase, settlement date for the sale, maturity date of the issue, interest (coupon) rate of the issue, price paid per $100 for the principal, par amount purchased.
by FactualFran
Tue Mar 19, 2024 10:49 pm
Forum: Personal Consumer Issues
Topic: How does a landline phone decrease my bundle cost
Replies: 52
Views: 3317

Re: How does a landline phone decrease my bundle cost

Also, if you are bundled with cable or fiber, chances are it's not a "true" landline (i.e. copper lines from your house to the telephone company) but rather some VOIP setup. It costs the internet provider almost nothing to offer this. Most phone companies are trying to get rid of traditional landlines and push everyone to VOIP because copper is so expensive to maintain. Landline service where I live stopped being available a few years ago. It must be cheaper for the telephone company to run a fiber optic connection, install a fiber optic to telephone jack adapter box, and provide a power supply for the adapter box that plugs into standard household electric service (with the power supply having a temporary battery backup for when...
by FactualFran
Tue Mar 19, 2024 1:58 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7461

Re: New insights on safe and perpetual withdrawal rates

Something to keep in mind with the PWR calculated by Portfolio Visualizer is that the periodic withdrawals are not adjusted for inflation. The withdrawal amount is a constant percentage of the balance when the withdrawal is made. It is possible to calculate an initial withdrawal rate for which inflation-adjusted withdrawals would have left an ending balance equal to the initial balance adjusted for inflation. Here is a graph of what each annual withdrawal amount would have been for 51 years of annual withdrawals with 1958 as the starting year and with the ending balance equal to the initial balance adjusted for inflation. https://svgshare.com/i/14YC.svg The portfolio was 50% stocks and 50% intermediate-term Government bonds using the total ...
by FactualFran
Tue Mar 19, 2024 11:09 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

I see where I erred. Because the "Box 1f" amount on my Schwab 1099-B (labeled as Accrued Market Discount) equals the Proceeds (Box 1d) minus the Cost (Box 1e), I mistakenly assumed AMD represented total gain. In reviewing Pub 550 once again, I see that AMD and RMD are essentially the same. (i.e., RMD is one of two approved methods for calculating AMD). But this doesn't negate my point that Box 1f Accrued Market Discount as listed on my 1099-B is incorrect (this is what I was referring to when I said it's been discussed ad nauseam in this thread). In order to follow Pub 550's reporting requirements, I must calculate and enter the correct AMD in 8949 column g, and the difference (which represents a capital gain or loss), goes in co...
by FactualFran
Mon Mar 18, 2024 11:12 pm
Forum: Personal Investments
Topic: Questions on Wash Sale?
Replies: 71
Views: 4260

Re: Questions on Wash Sale?

Two possibilities: 1) Authors of 71-316 were sloppy and did not consider 56-602 or Congressional intent and chose a bad example. 2) Authors of 71-316 did consider 56-602 and Congressional intent, but didn’t bother to mention it, and decided that the transaction in the example was not a bona fide sale to reduce the taxpayer’s holdings. 1) is the more likely reason, but in either case, it doesn’t affect OP’s situation, which is a bona fide sale to reduce the taxpayer’s holdings, and therefore not a wash sale. It is possible to read RR 56-602 and the example in RR 71-316 strictly enough that ruling in RR 56-603 does not apply to the example in RR 71-316. It depends on whether all of the shares of a purchase lot are considered to be a portion ...
by FactualFran
Mon Mar 18, 2024 3:25 pm
Forum: Investing - Theory, News & General
Topic: New insights on safe and perpetual withdrawal rates
Replies: 61
Views: 7461

Re: New insights on safe and perpetual withdrawal rates

I retired last year, on a 1 million capital. Following all these discussions, I was convinced that 4% is indeed a safe withdrawal rate when having a 30 years maximum time span in mind. Turns out my investments did exceptionally well and , after withdrawing 40k and adjusting for inflation, my capital is now 1.1 millions. Question: can I recalculate the 4% swr now and withdraw 44k/yr. going forward (adjusted for inflation) ? Yes, as long as an initial withdrawal rate of 4% always supports at least 30 years of inflation adjusted withdrawals. An example that would not have worked is with the 50:50 stock:bond portfolio that Bengen used, an initial withdrawal rate of 4.23% would have supported 30 years of inflation-adjusted withdrawals for 1965 ...
by FactualFran
Mon Mar 18, 2024 3:05 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

My understanding of the term 'accrued market discount' (AMD) is that it refers to the difference between cost or basis and the sale proceeds. However, when a note or bond is sold prior to maturity and the ratable market discount (RMD) is different from the AMD (almost always the case unless sale price happens to exactly align with original YTM), the AMD must be split between RMD and capital gain (or loss). Since Schwab's 1099-B only lists AMD in this case, it's incumbent upon the taxpayer to manually calculate RMD and enter in column g, code D (flows to Sch B) with the difference in column h (flows to Sch D). But this has already been thoroughly discussed, ad nauseam, in this thread. A taxpayer who receives a Form 1099-B with transactions ...
by FactualFran
Mon Mar 18, 2024 1:36 pm
Forum: Personal Finance (Not Investing)
Topic: Online Social Security application [question]
Replies: 19
Views: 1656

Re: Online Social Security application [question]

If your wife does nothing and the SSA does not contact your wife about the application, then the SSA will make the first payment in August and will likely automatically make a retroactive payment equal to the benefit amount for one month.
by FactualFran
Mon Mar 18, 2024 12:59 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

ginahoy wrote: Mon Mar 18, 2024 12:52 am I just saw this... That wasn't my experience. I sold two T-notes prior to maturity last year and my Schwab 1099-B put the entire gain in box 1f, with "0" in the Realized Gain or (loss) column. I calculated the 'ratable market discount' and entered in the adjustment column g (f8949), with the difference in gain/loss column h. OTOH, I also sold some T-bills prior to maturity. As others have mentioned, Schwab doesn't even report these transactions to the IRS!
A Form 8949 filed with the income tax return should have what is on the 1099-B for the sale with "D" in the adjustment code column and the accrued market discount on the 1099-B in the adjustment amount column.
by FactualFran
Sun Mar 17, 2024 3:27 pm
Forum: Personal Investments
Topic: Questions on Wash Sale?
Replies: 71
Views: 4260

Re: Questions on Wash Sale?

Revenue Ruling 71-316 is specifically about whether the wash sale section of the income tax law applies to sales of securities that have been purchased on margin. The ruling was that it applies. Because the sequence of transactions in the option post do not involve a purchase on margin, ruling 71-316 is irrelevant to the opening post. Ruling 71-316 includes an example with a relevant difference from the sequence of transactions in the opening post. The sequence of transactions in the opening post sells earlier shares before buying later shares and selling the later shares for a loss. In the example in the ruling, the loss is disallowed because of the earlier shares acquired in the wash sale window. In the example in the opening post, the ea...
by FactualFran
Sun Mar 17, 2024 12:13 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bon

Parkinglotracer wrote: Sun Mar 17, 2024 11:06 am It is listed on my vanguard 1099-INT under items not reported to the IRS.
Accrued interest paid is not listed on either Form 1099-INT at the IRS website (https://www.irs.gov/pub/irs-pdf/f1099int.pdf) or on the Form 1099-INT part of the tax reporting statement that I have from a brokerage other than Vanguard. I don't have a brokerage account at Vanguard with bonds on which accrued interest was paid.
by FactualFran
Sun Mar 17, 2024 11:13 am
Forum: Personal Investments
Topic: Questions on Wash Sale?
Replies: 71
Views: 4260

Re: Questions on Wash Sale?

Of there is a general principle. Here is the text from the ruling again Subsequent Congressional discussions and reports refer consistently to the `new acquisition' and to `repurchasing' and `buying back' stock or securities. These terms indicate an intent on the part of Congress to prevent a taxpayer's taking losses for tax purposes while giving up his position in a security for only a few days or not at all. However, they do not indicate an intent to disallow a loss sustained in a bona fide sale of securities made to deduce the taxpayer's holdings, even though the sale is made within 30 days after the securities were purchased. Accordingly, it is held … Whoever transcribed the ruling transformed the word "reduce" in the ruling ...
by FactualFran
Sun Mar 17, 2024 11:01 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bon

Parkinglotracer wrote: Sun Mar 17, 2024 6:25 am It would take a TT programmer a few minutes to add the prompt … i see you have $666 on your 1099 INT under accrued interest paid; do you want to make an adjustment to your interest income? Maybe the TT customer support SW lead is a BH and reads our thread. Or maybe he / she lives in a different country and doesn’t pursue BH land.
Where on a 1099 INT is the amount of accrued interest paid that would end up as an adjustment on Schedule B?
by FactualFran
Sat Mar 16, 2024 12:14 pm
Forum: Investing - Theory, News & General
Topic: Questions on 1099-B (ratable discount for treasuries sold prior to maturity)
Replies: 17
Views: 2877

Re: Questions on 1099-B (ratable discount for treasuries sold prior to maturity)

No. Not sure if this makes any difference, but I sold only a small part of my T bill purchase, so there was interest in 1099-INT for that T-bill but it didn't cover the T bill portion that I sold. I looked at the full history and the math was clear = My total income (Redemption amount + sale amount - purchase amount) was equal to interest in 1099-INT + gain reported in 1099 summary. That you for posting the information. Using made up T-Bill transactions of $5,000 of face value bought for $4,800 $1,000 of that face value sold before maturity for $980 the remaining $4,000 of face value held to maturity then the 1099-INT have reported $160 of interest and the 1099 summary would have reported a $20 gain. How much of the $180 difference between...
by FactualFran
Fri Mar 15, 2024 8:15 pm
Forum: Investing - Theory, News & General
Topic: Questions on 1099-B (ratable discount for treasuries sold prior to maturity)
Replies: 17
Views: 2877

Re: Questions on 1099-B (ratable discount for treasuries sold prior to maturity)

Did a 1099-INT from Schwab include any amount for the T-Bill sold before maturity?
by FactualFran
Fri Mar 15, 2024 8:04 pm
Forum: Personal Investments
Topic: Questions on Wash Sale?
Replies: 71
Views: 4260

Re: Questions on Wash Sale?

There is Revenue Ruling 56-602 . The ruling is that selling a portion of a purchase lot for a loss within 30 days of the purchase is not a wash sale. The ruling does not specifically address selling all of a purchase lot, rather only a portion. However, an implication of the ruling is that a sale of all of the purchase lot would not a wash sale. In which case, an acquisition within 30 days after the sale on March 29, 2021 can cause that sale to become a wash sale. On the other hand, a ruling specificlly about selling all of a purchase lot could be there is a wash sale with the purchase on March 22, 2021. As other posts have indicated, the wash sale would be an irrelevant one. In which case, shares acquired within 30 days after the sale on M...
by FactualFran
Fri Mar 15, 2024 10:41 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2950
Views: 623249

Re: Now that long TIPS yields are 60 bp off their highs I will…

TheTimeLord wrote: Fri Mar 15, 2024 10:35 am This is wild, I pulled my numbers of eyebonds.info this morning but have no clue where I got 307.671, I don't see it on any line. :oops: :oops: :oops:
307.671 was the Reference CPI for 1/1/2024.
by FactualFran
Thu Mar 14, 2024 7:18 pm
Forum: Personal Finance (Not Investing)
Topic: Uggh. Taxes. Cost Basis and date of purchase
Replies: 10
Views: 1398

Re: Uggh. Taxes. Cost Basis and date of purchase

The data for the purchase date and the basis should have been transferred by Betterment to Fidelity. Fidelity should have used the transferred data when generating the Forms 1099-B for the sales.
by FactualFran
Wed Mar 13, 2024 10:07 pm
Forum: Personal Finance (Not Investing)
Topic: Excel Forumula Help -cumulative percentage growth
Replies: 13
Views: 1269

Re: Excel Forumula Help -cumulative percentage growth

If Numbers does not have the PRODUCT function suggested by JeanneForever, use an additional column to calculate the product using simple cell formulas (in Excel notation):

Code: Select all

Year  Return  CumulReturn           1
2012  16.38%  =b2                   2
2013  33.52%  =(c2+1)*(b3+1)-1      3
2014  12.56%  =(c3+1)*(b4+1)-1      4
2015   0.39%  =(c4+1)*(b5+1)-1      5
  A      B          C            col\row
For each additional year, add a row, enter the Year and Return, and copy the paste the formula from the previous row for CumulReturn.
by FactualFran
Tue Mar 12, 2024 10:47 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?
Replies: 4
Views: 509

Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

In a sense, the pro-rata rule always applies. However, in some cases 0% of the amount converted is taxable.

Instead of assuming what the taxable amount for the conversion will be based on an understanding, either look at the Form 8606 filed with the income tax return for 2022 or fill out a Form 8606 for 2022 with the amounts and follow the instructions for the form.
by FactualFran
Sun Mar 10, 2024 9:47 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

henryphseven: a clarification about the amount reported on a 1099-INT that you received for the sale of a T-Bill, please. An extract from one post indicates the 1099-INT reports the gain. In my case, all the gains from selling T-bills are reported in 1099-INT as Interest Income. According to popular opinions, I should divide this amount into capital gain and interest income by myself and adjust my 1099-B and 1099-INT accordingly. An extract from another post indicates the 1099-INT reports the full acquisition discount, not the discount ratable by the number of days held). If the amount on a Form 1099-INT includes the correct ratable share of the acquisition discount, then on a Form 8949 use the price paid plus the ratable share of the acqui...
by FactualFran
Sun Mar 10, 2024 3:47 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Report Gain from Selling T-Bill as Interest Income?

if i need to add adjustment in Schedule B, what should I put in line 1? "Accrued Interest Adjustment"? Will IRS understand this part of interest income is re-characterized as capital gain? I would use "Accrued Interest" in the payer column in a row of line 1 of Schedule B. It is a standard type of adjustment to interest. It is likely a good idea to avoid using a non-standard type of adjustment. It is not accrued interest that was paid with the purchase, but the interest and capital gain amounts end up being what they should be. Adjustment rows should be after a "Subtotal" row with the sum of the interest payments on previous rows of line 1 from Forms 1099-INT (and interest payments not reported on a Form 1099-...
by FactualFran
Sun Mar 10, 2024 2:34 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Report Gain from Selling T-Bill as Interest Income?

Thank you for your explanation. my case is the last case. do i need to add adjustment on Schedule B instead of directly entering the correct interest income? im not sure if tax software allows me to make adjustments on Schedule B. I would add a row to line 1 of Schedule B with an explicit adjustment. However, I do not use an income tax return preparation program. Double check whether the tax software allows Accrued Interest to be entered. Any income tax return preparation program that supports Schedule B should allow the standard adjustments to interest to be entered. At some point in processing an income tax return, the IRS likely checks whether the total interest amount reported on Schedule B without explicit adjustments is consistent wi...
by FactualFran
Sun Mar 10, 2024 1:31 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Report Gain from Selling T-Bill as Interest Income?

if i report part of the gain from selling T-Bill as capital gain, which box should I check on Form 8949? (B) Short-term transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B Since my Form 1099-B does not include this transaction, should I check Box C? Thank you. I have no experience with selling a T-Bill before maturity. However, a Form 8949 should likely have box C checked (transaction not reported on a Form 1099-B). That leaves what should be on a Form 8949 as the cost, adjustment code, and adjustment amount. I would use an approach that ends up with the correct capital gain and interest amounts being on the income tax return. How to do that depends...
by FactualFran
Sat Mar 09, 2024 4:39 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

hghysm21 wrote: Sat Mar 09, 2024 2:05 pm Thanks very much, indeed! I finally understand what to do. I've been searching and reading for days and was still confused until now.
Thanks a million!
At the risk of causing confusion, here is some addition information.

With a transaction on a Form 1099-B for the sale part of a wash sale, the cost or other basis of that sale is not adjusted for the disallowed loss of that sale. The disallowed loss adjusts the cost or other basis of the substantially identical shares that were acquired. When those shares are sold, the cost or other basis on a Form 1099-B will include the adjustment made because of the other sale.
by FactualFran
Sat Mar 09, 2024 1:41 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

Thanks very very much!! Very sorry about asking several times. On my 1099B, each of my short-term trades are listed with proceed, cost, gain/loss, as well as the totals of each category. A few show Wash sale. The statement “The disallowed loss is included in the cost basis; therefore, it is calculated into the realized gain/loss”, seems to me, is that there is no need to adjust the reported gain/loss for wash sale. I don’t know how to ask any other way. Simply, given the brokerage firm 1099B statement, I don’t have to do any wash sale adjustment? Correct? A footnote in a summary section of a tax reporting statement from a brokerage is irrelevant to what should be on a Form 8949 filed with an income tax return. Each transaction listed on a ...
by FactualFran
Sat Mar 09, 2024 12:11 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Taxation of Treasury bills, notes and bonds

The summary page of my 2023 Fidelity 1099B shows: Proceeds, Cost basis, Wash sale, Realized gain/loss. Also, a statement saying “The disallowed loss is included in the cost basis; therefore, it is calculated into the realized gain/loss.” It seems to me, Fidelity has done the wash sale adjustment that 8949 requires. My questions are: 1. On 8949, should I just report Fidelity’s Proceed, Cost basis, Wash sale and Realized gain/loss without any adjustment? 2. Or, I must still do adjustment by adding the wash sale to the Realized gain/loss? Thanks! You have asked the same questions multiple times in multiple topics here and have had received answers, such as in the post in the topic "adjusted cost basis & 8949". Did those posts no...
by FactualFran
Fri Mar 08, 2024 10:48 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1078
Views: 157187

Re: Report Gain from Selling T-Bill as Interest Income?

henryphseven wrote: Fri Mar 08, 2024 9:26 pm It seems that treating all gains as ordinary income is not consistent with IRS rules.
Treating the difference between the purchase price and the sale price as ordinary income is consisting with IRS rules when the purchase price was lower than the sale price and the difference is not more than the ratable share of the acquisition discount. If the difference is more than the ratable share, then the excess over the ratable share is a capital gain.
by FactualFran
Fri Mar 08, 2024 1:52 pm
Forum: Personal Investments
Topic: TIPS, inflation, deflation, and the "phantom tax"
Replies: 10
Views: 1662

Re: TIPS, inflation, deflation, and the "phantom tax"

Thesaints wrote: Fri Mar 08, 2024 2:19 am Example: receive $50 in coupon, but principal went down $30: you pay taxes on $20 interest.
If principal had gone down $60, you pay no taxes and carryover $10 to offset next year interest (and principal increase).
Instead of a carryover to the next year, there can be an ordinary loss for the current year. If the example had included that for the previous year $50 from the TIPS had been taxable income, then instead of a carryover to the next year, $10 would be an ordinary loss for the current year (to be reported on Schedule A of the income tax return). Details are in the Deflation Adjustments section of the regulations for inflation-indexed debt instruments.