Why do I need to choose what cost basis was or was not reported, when working on the club's taxes?
Starting with 2012, all capital gain transactions are required to be reported differently on the tax return forms, depeding on whether your broker has already reported the cost basis (or other basis) to the IRS or not. Brokers are required to report basis to the IRS for most stocks that were purchased in 2011 or later.
If you sold stocks this year that were aquired before 2011, their basis may not be reported to the IRS yet.
The information required to fill in this new section should be on the 1099-B that the club receives from the broker. It will be used on a revised 1065 form, and in the new form 8949.
We have seen some brokers who will group together multiple blocks of stock, in cases where many of the blocks were for fractional shares. While the tax printer will ask for an entry on each block, the 1099 from the broker may simply list the date as 'various', or may show the purchase date as a range. In that case, we suggest to check FAQ 248, My broker statement or 1099 does not list individual blocks.
When you get to this screen, it will show eight headings; the first five are taken from information that you have entered into the accounting system:
- Description of Property: The name of the stock, as well as the number of shares sold from a particular block.
- Date Aquired: The date that the particular block of shares was originally purchased.
- Date Sold: The date that was entered into the accounting system as the sale date.
- Proceeds: The amount of money that was received for the sale of a particular block of shares. Keep in mind that if the club bought shares in a stock several times (such as a reinvestment), that the proceeds will be separated out for each block of shares that was sold.
- Cost Basis: The cost basis of the security prior to the sale. As with the Proceeds, this will be the cost basis for the individual blocks of stock, if a security was purchased more than once over time.
The final three columns are all related to information your club would receive as a 1099 form from a broker, or company due to a stock sale. As such, if you do not yet have a 1099, we strongly suggest to either wait for this to arrive from the broker, or see if this information is available from a broker or company web site. Of the three listed below, only one column needs to be filled in or selected for each block of stock:
- Broker 1099 Reported Basis: If the broker reported a cost basis for the sale of security, or a block of shares, enter the cost basis that the broker has reported in the first column.
- Basis not reported on 1099: If the broker reported the sale of a security, but for any reason did not record a cost basis, put a check-mark in the second column.
- No 1099 received for sale: If for any reason the club did not receive a 1099 from a broker or other agent for the sale of a particular stock, or block of shares, put a check-mark in the final column.
Completing the extra screen in the tax printer will allow it to correctly fill out the revised schedule D, and form 8949.
For more information about the myICLUB tax printers, please see FAQ 65, How do I use the Online Tax Printer?