Capital Gains Reporting 


    AICPA Strives to Improve New IRS Form 8949

    The IRS revised the information that must be included when filing a Schedule D for 2011 due to a law that requires the basis of the security be disclosed when a taxpayer reports the information for determining capital gain or loss.

    Many practitioners are concerned that the brokers’ information being reported on the 1099B includes unintentional errors  in separating covered and uncovered securities on Form 8949 due to the data conversion required to complete the form.

    The IRS created this new form as a result of a law enacted in 2008 that requires brokers to file an information return reporting the basis of a “covered security” in addition to the gain or loss.” The return must include the customer's adjusted basis in the security and specify whether any gain or loss with respect to the security is short term or long term.  This information is required to be detailed as a part of the Form 1099-B that all brokerage customers receive.

    However, since all brokers forms 1099-B are not uniform and each is presenting the information differently the time and cost of tracking each transaction has significantly added to the compliance burden on taxpayers and their tax return preparers.  The time to convert this data into Form 8949 has proven to be significantly greater than IRS, the Office of Management and Budget, or anyone else had anticipated.   

    The AICPA is concerned that errors in the 1099 B Forms impacting on  cost basis, gross proceeds, gain/loss and holding period will result in errors..  However, because the data may not be coming through in the proper bucket, the potential for massive numbers of unnecessary CP2000 notices exists.

    A task force comprised of both the AICPA IRS Practice & Procedures Committee and the Individual Technical Resource Panel is engaged in discussions with the IRS to address a series of issues that we hope will lead to a clearer understanding and a more uniform approach to how the 1099-B information should be displayed so that a level of consistency will result for all brokerage firms.

    Latest Developments

     

    In recent meetings with the IRS the AICPA continued to raise the concern over the inconsistencies demonstrated between brokerage firms on how the information on stock transactions in 2011were reported. In addition concerns over 2012 forms 1099B were raised since in 2012 added categories of securities will be added to the mix, specifically mutual funds. The IRS is making changes to both forms 8949 and 1099B for 2012 and comments were made with regards to the information is being communicated by the brokerage firms.

     

    We anticipate revised forms for the 2012 filing season.




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