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Can I just attach broker statements to my income tax return instead of preparing Form 8949 in detail?
The IRS instructions indicate:
Instead of reporting each of your transactions on a separate line of Form 8949, you can report them on an attached statement containing all the same information as Form 8949 and in a similar format. ... Do not enter "available upon request" and summary totals in lieu of reporting the details of each transaction on Form(s) 8949 or attached statements.
It is our opinion that most broker statements don't fulfill the "containing all the same information as Form 8949 and in a similar format" requirement.
Do you have a solution for Mark-to-Market Traders?
As described at http://www.irs.gov/taxtopics/tc429.html, certain individuals qualify as "traders in securities". Such individuals can make an election under section 475(f) to use the "mark-to-market" method of accounting.
Under the mark-to-market method of accounting:
- Gains and losses from sales of securities are treated as ordinary gains and losses and are reported on Part II of Form 4797, Sales of Business Property.
- The limitations on capital losses do not apply.
- The wash sale rules do not apply.
- At the end of the year you must mark your securities to market, that is you treat any securities held at the end of the year as if you had sold them on that day for the current market value.
We do not currently have a solution for Mark-to-Market traders. We would like to develop one, however. If you can help us locate a free or low-cost web service for looking up securities values on a specified date or if you are willing to participate in a beta test program for future program releases, please email us.
How do I enter short sales on my Excel Spreadsheet of realized gains and losses?
What are the requirements for your XLS File (Excel Spreadsheet) of realized gains and losses?
What should I enter in the "Description of Property" column of my spreadsheet?
The IRS instructions indicate:
You can use stock ticker symbols or abbreviations to describe the property as long as they are based on the descriptions of the property as shown on Form 1099-B or 1099-S (or substitute statement).
Your broker will report the description in box 9 of Form 1099-B.
As as example they say:
In column (a), enter (for example) 100 sh. XYZ Co.
What is TXF?
TXF is an acronym for Tax Exchange Format, an accepted standard for the import and export of tax-related information.
The TXF specification is available at http://turbotax.intuit.com/txf/
Almost all income tax preparation software will import TXF files.
One noteable exception, however, is the online edition of TurboTax. Only the desktop editions of TurboTax allow import of TXF files. You can use our program to convert your TXF to OFX for direct import into TurboTax online edition.
What is the correct order to input stocks on Form 8949? Should I input stocks by alphabet order, date acquired order, date sold order, or any order doesn't matter?
The IRS instructions are silent on the subject. There is no specific requirement, so you can enter in whatever sequence you prefer. Some prefer alphabetically by security.
The IRS requires that long-term and short-term capital gains and losses are segregated and appear on separate sheet. The sample excel spreadsheet you provide does not provide for this differentiation. How does this work?
The conversion program will segregate the gains and losses based on holding period. You don't have to segregate the transactions in the spreadsheet.
How do I integrate what you provide with my tax software?
There are two possibilities:
You can import the TXF we provide you (or use direct OFX import in the case of TurboTax) into your program.
However, if you have a large number of transactions this can have an adverse effect on the performance of your software. There also may be limits on the number of transactions supported by the software. (For example, TurboTax Online limits to 500 transactions and TurboTax Desktop limits to 3000.)
(2) ATTACH PRINTED FORM 8949
You may make "See attached schedule" summary entries into your software. There would be one entry representing the total short-term gain or loss and another representing the total long-term gain or loss for copy "A" of Form 8949. Then another set for copy "B" may apply.
You would then print the Form 8949 and attach it to your paper return. If you electronically file, you would attach the Form 8949 to Form 8453 and mail that form to the IRS.