Discussion:2005 Schedule D Instructions - Sch D-1

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Discussion Forum Index --> Tax Questions --> 2005 Schedule D Instructions - Sch D-1


Cpabakem (talk|edits) said:

21 December 2005
2005 Schedule D Instructions - Schedule D-1 (Page 6)

http://www.irs.gov/pub/irs-pdf/i1040sd.pdf

"You must enter the details of each trans action on a separate line. If you have more than five transactions to report on line 1 or line 8, report the additional transactions on Schedule D-1. Use as many Schedules D-1 as you need. Enter on Schedule D, lines 2 and 9, the combined totals from all your Schedules D-1.
Do not enter "see attached" and summary totals from an attachment in lieu of reporting the details of each transaction directly on Schedule D or D-1."

The first paragraph has been in the IRS instructions for years, but the second paragraph "Do not enter......... " is new for 2005.

There was quite a flurry a few years ago when the IRS National Office admitted their return offices were accepting returns not using the Sch D-1s in disregard of the instructions. Some even reported the totals saying "details on request" which was accepted. The Office did say that some of the material ones probably were audited

Milt Baker CPA

SJTaxGuy (talk|edits) said:

23 December 2005
This is a real downer for clients having hundreds/thousands of transactions! It will be interesting to see if the IRS enforces this new requirement. It will also be interesting to see if clients will pay for entering all Schedule D transactions.

Mshelden (talk|edits) said:

December 23, 2005
it would be nice to see a Broker give the clients a listing of their transactions on a schedule D-1 to begin with. You know, a substitute form that looks just like the IRS form, same info and columns etc. Of course, it would be impossible to get into the TR programs we use, so I guess it wouldn't matter. :)

DZCPA (talk|edits) said:

24 December 2005
I have for the past 5 years reported all Long Term Gain, Loss, Short Term Gain, Loss as separate line items in total noted as "Various Trades". Some clients have had trade proceeds exceeding $30,000,000 (day traders). Gear Up tax seminar said it was OK to file like this. I have had zero problems and zero audits regarding theses returns. I will continue to file accordingly. You do not save your clients any money by listing all of the transaction and just waste a lot of time.

LINDA W (talk|edits) said:

31 December 2005
I have recently heard reports from other tax preparers that the IRS is coming down on them for not reporting each separate transaction on Schedule D. For those who have been taking shortcuts my advice is to clean up your act. If clients want to make many stock trades then they must pay for it at tax time!

DZCPA (talk|edits) said:

3 January 2006
Linda, What were the results of the IRS coming down on the other tax preparers you heard reports about?

Sfcpa (talk|edits) said:

3 January 2006
I have heard also through spidells year end class that the service is looking at this but I sincerely believe that this will not see the light of day do to the big investors and the cost and time to enter thousands of trades by day traders and even just investors with large portfolios - this year i will most likely try to comply but only when it makes sense

RLMCPA (talk|edits) said:

3 January 2006
I have several clients, some day traders, some just with active portfolios, and I also just attached a copy of the pages of the broker's statement with the realized capital gains & loss detail (assuming it has the correct basis, etc). I sometimes add lines to Schedule D for “cash-in-lieu” or other items where the broker’s information was incomplete.

This is the first year I am e-filing so I have an even bigger incentive not to enter all that data. Other CPAs in my area have stated to me that they use the "details available upon request" and have not had any problems with their e-filing over the past few years. I'll watch this discussion and let you know if I see the IRS rejecting returns for lack of complete Schedule D.

From a practical standpoint, what's the risk? If you don't provide the details, but the summarized numbers are correct, the IRS has no authority under the Code to deny what you reported if you have substantially complied. The Courts have ruled in the taxpayer's favor on this issue multiple times. Worst case scenario, you provide the details upon request of the IRS and assuming the summarized information was correct, I bet the IRS goes away.

DZCPA (talk|edits) said:

3 January 2006
RLMCPA, What you say makes alot of sense. I will continue to summarize gains and losses by short & long term. Since I E file, there will be no attachments. My job is to save my clients money whenever possible. Since the taxable income is the same either way, the IRS would just be spinning their wheels asking for this additional detail which I can generate in a moment if asked for. Jacking up my fee for this added detail is not my goal in dealing with my clients.

AJRCPA (talk|edits) said:

26 January 2006
I have always used "Schedule Attached" to save time and money. The IRS has a point for returns noted as "Details available Upon request" -- as this does not comply. Ultimately, I think the only hammer the IRS weilds - is to flag returns not using the D-1 for tax examinations.

LJACPA (talk|edits) said:

26 January 2006
I had read this discussion previously and skimmed back through it, so this may have already been mentioned. The IRS has reversed its earlier position on the listing of all stock and brokerage account activity in lieu of attaching statements from the taxpayer's broker. The IRS, responding to substantial communications on the topic, stated that taxpayers may continue to attach the broker's summary to the IRS Form schedule D. This came from my state association on 1/19/06. I've also read it on the IRS website.LJACPA 16:04, 26 January 2006 (CST)

DZCPA (talk|edits) said:

26 January 2006
AJRCPA, I hope they audit thousands of them. The IRS will end up wasting their time and use up their resources finding out taxpayers have complete backup. Hopefully, the IRS will leave the schedule C taxpayers alone with no personnel availble to audit them!

BusTax101 (talk|edits) said:

23 March 2007
Another question on schedule D. Are dates required if Form 1099-B shows that they sold long or short? Proseries does not say there is an error if I don't put the dates in, but I'm concerned that IRS does not approve of no dates.

Lalva (talk|edits) said:

4 May 2007
AJRCPA, when you say "Schedule Attached", can you still e-file?

Kevinh5 (talk|edits) said:

4 May 2007
as long as he just says it out loud, yes.

Kevinh5 (talk|edits) said:

4 May 2007
you have to say it while pushing the e=file button, though.

Kevinh5 (talk|edits) said:

4 May 2007
8453

Lalva (talk|edits) said:

4 May 2007
Kevinh5, you are funny.

I'll push the e-file button while I say that out loud. And I'll make sure I mail form 8453 too.

Kevinh5 (talk|edits) said:

4 May 2007
my point was you can't use 8879, but have to e-file the "olde fashioned" way using the 8453.

Michaelstar (talk|edits) said:

4 May 2007
As I have said in the past - I input all of the detail as requested per the instructions. To take "short cuts" to save your client money - is not an excuse I buy. We also are in business to make money - not to take short cuts and save the world money so they can go on expensive vacations with all of the $$ they made from making all of the trades.

They are not my rules - I just abide by them.

Lalva (talk|edits) said:

4 May 2007
Michaelstar, this is a sad case.

This is an old lady, whose son (broker-to-be) daytraded all her retirement $$ and LOST all of it. She gave me 50 pounds of paper with all the trades. I already gave her a price quote, so I almost fainted when I saw the stack of papers. I don't want to charge her more, so I think that I'll take the risk and mail the supporting docs. This poor lady now has to work and she earns peanuts giving massages, painting portraits, sitting dogs, stuffing envelopes...

PVVCPA (talk|edits) said:

May 5, 2007
Michael, It's not a shortcut. It's allowed.

You can use JR's method, although not allowable. He still does the 8879 and attaches an e-file statement that says the schedules are at his office and available should the IRS like to ever see them.

Michaelstar (talk|edits) said:

5 May 2007
Lalva - certainly every situation is different. I do not have and have never had such a situation. I also do not give anybody a fixed price. Sort of get a little bent out of shape when a client tries to pull the fast one - not saying your client intentionally did this. We all need to evaluate our risk and make a business decision based on that risk.

Paul - I still have a few things to learn when it comes to e-file.

Lalva (talk|edits) said:

5 May 2007
I have been giving fixed prices this year only because I need new clients and they like to know exactly how much they are going to pay.

But like Michaelstar says is a risk (I know it now first hand). Next year I am increasing my prices (up to now they are bellow market) and I am giving "estimated" price quotes. My husband asks me if I am still doing "charity" work.

Lalva (talk|edits) said:

5 May 2007
Also I forgot to mention that one of the brokerage companies that this lady used gave her an Excel file with the D1. It looks like the real deal (or almost), so I am attaching two D1-like forms to the 8453.

That should do it!☺

Sandysea (talk|edits) said:

5 May 2007
I got burned many times by quoting a price first as well. I thought for one...a police officer with a Sch C...I thought how hard can this be a small cleaning business on the side...ended up to have revenue on the "small" business of 50K and had to do all the bank recs, etc. Here I thought a 30 minute return...75.00 for a new client (police officer...love to keep them happy...hehe) and it ended up taking me several days to do all the work...

The charity work for me is daunting. I am going to this year fire most of my "free" clients....I would rather be fishing or swimming or something than do returns in the summer that will not pay anything...

I will still keep the free clients who truly want to pay me but have no money. But for those that are simply "cheap"...they are going adios!!!

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