published February, 2012
The IRS has set up new rules for brokerage houses (Schwab, Scott Trade, etc) that they now have to include BASIS as well as their estimation of long term or short term holdings. This means your 1099-B may be delayed this year. And that may mean a delay in processing your tax return.
The tax return for 2011 has a new Schedule D—the place we report capital gains and losses. It is now a summary only, with details of the transactions getting reported on a new form, the Form 8949. There are two sides to this new form, one side for short term, and the other for long term. Also, there are three boxes at the top of each side of each page—and you can only check one box per page. The boxes are to tie to the 1099-B forms: box A is checked when reporting transactions where the brokerage house IS reporting the basis to the IRS. Box B is checked when reporting transactions where the brokerage house IS NOT reporting the basis. Some securities transferred from one brokerage to another didn’t include the basis information, so the new brokerage just doesn’t have the information about basis, so they can’t report it on the 1099-B. If you’ve only used one brokerage house over the years, they MAY have the basis info, but they previously didn’t have to report it to the IRS, so I’m not promising they’ll have it.
Since there is a change in the reporting requirements, several brokerage houses have said it may take them until February 15th to report.
To report stock trades for 2011, we’ll need to have the 1099-B in hand, to make sure what we submit to the IRS on your tax return matches what the brokerage house reports – or you’re likely to get a letter from the IRS asking you to explain the difference.
There IS a column on the Form 8949 for “adjustments” in the unlikely (!) event your brokerage house does not compute the gain/loss correctly when reporting the sale price and the cost.
If you have several 1099-B transactions that are short term, and the brokerage has the basis for some and not for others, you’ll have two pages of Form 8949, one with box A checked and another page with box B checked. Since most returns will be efiled, this is not so much a waste of paper as it might seem.