Discussion:E-File and Schedule D transactions

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Discussion Forum Index --> Tax Questions --> E-File and Schedule D transactions


GPV (talk|edits) said:

18 February 2007

Can you use the paperless E-File (With form 8879) returns with only summary information from stock sales reported on Schedule D. For example a client with several stock sales (over 100) reported on Merrill Lynch statement. Can you just put the totals (gross proceeds, cost, etc.) and a description Merrill Lynch, or in order to use paperless e-file, or do you have to list each stock transaction separately?

I have heard various things, 1 - if E-file and use summary info have to file Form 8453 and submit a copy of Merrill Lynch Statement with 8453

2 – If use 8879 to e-file – must list each stock transaction

3 – If file by paper, can just put summary info and maintain Merrill Lynch statements (not send in) in case needed for future.

IF you know the correct way, could you also please let me know where I can find the rules regarding the correct way to file.

Thank you

Deback (talk|edits) said:

February 18, 2007
I'm not sure about #3 (I haven't done any paper filings for the last four years), but either #1 or #2 is correct. If you have too many to type on Sch D, just use method #1, if you have an appropriate schedule to attach to Form 8453. You might check out the instructions for Sch D on the IRS site.

1040man (talk|edits) said:

18 February 2007
Options for Filing Schedule D without Detail from Multiple Transactions

Effective January 13, 2006, taxpayers can now e-file with multiple Schedule D transactions using the Form 8453, U.S. Individual Income Tax Declaration. Taxpayer's must attach the paper Schedule D-1 or acceptable substitutes to Form 8453. Form 8453 must be signed by the taxpayer and mailed to the Internal Revenue Service within three business days after receiving acknowledgement of tax return acceptance. Taxpayers who submit paper Schedules D-1 or acceptable substitutes are ineligible to use a Personal Identification Number (PIN) signature method.

Death&Taxes (talk|edits) said:

18 February 2007
I am positive I've read comments here that many do not even bother to send the detail. I could be wrong but I recall this discussion last fall.

Gosix (talk|edits) said:

18 February 2007
I would send the detail. I sent one guys off last year that had 1500 transactions and yet another year of losses. I would have advised him to start electing trader status, but he's accumulated so much in losses that he needs to recoup those first. Other than paperwork there would be no benefit to trader status.

Hope he starts profiting soon, before he goes bust.

Death&Taxes (talk|edits) said:

18 February 2007
These are returns I prefer doing by paper, and attaching the detail to the back of the return, even blotting off the broker name and account number by using the copier and a piece a cardboard to cover same. I think when a client must pay the postage to submit this book of a return and then one to the State, PA, especially, it gives the client an idea of how compilcated they have made their life. Pennsylvania wants no staples in their returns, so there is this package with a big paper clip, or grasp type clip, holding all these papers together. PA also wants all K-1s, so combine a heavy trader with someone investing in lots of energy PTPs and you have a nightmare for mailing.

There are returns where K-1s are required that you cannot efile because the number of tax shelters which require copies of K-1s, or at least I could not file them last year when one woman had 34 of them. And these can't be summarised. I charged her $25 for each K-1 plus the regular fee.

What I recall was the year of capital gain change, where many brokerages did not break out the pre and post May 5th gains and losses and we had to do the work. This did not affect short term traders but many two or three page summaries had to be data entered.

Gosix (talk|edits) said:

18 February 2007
Back prior to it becomming the norm for the brokers to match the trades, I got tired (and behind) trying to shuffle the paper and type it all into a substitute D1 via Excel.

Started copy/pasting the transactions from the broker website into Excel, deleted columns I didn't need, used the sort functions to seperate buys and sells into two columns, sorted each by security, then matched the individual trades up using copy/paste. Eliminated about 70% of the time involved as it eliminated all the retyping of the numbers and such. Kept Fee's the same.

Death&Taxes (talk|edits) said:

18 February 2007
But then there are the ones where you think you are done and then you note the brokerage has marked the cost of two or three with N/A, and it does not mean 'Not Applicable' but Not Available. Sometimes the reason is simple; they are a spin-off or the like and the original cost is still with the original stock, and if that stock was also sold all is okay [or if it was sold in a prior year though this means you understated gain that year] but if the original stock is still held].

PVVCPA (talk|edits) said:

February 18, 2007
I just made Schwab do all the homework for one my clients. Apparently, they convinced my client to change accounts over to Schwab. Then they reallocated his entire portfolio. They had a very pretty Realized Gain/Loss report with N/A's for all the costs.

Figured we would make them earn some of that commission.

JR1 (talk|edits) said:

February 18, 2007
I will continue to use the 8879 and summarize the detail.

Bobw12 (talk|edits) said:

6 March 2009
Does anyone know if there have been any changes/update to this procedure or have there been any new directives issued? I had thought the 8453 had been phased out and I haven't used one in several years.

RoyDaleOne (talk|edits) said:

6 March 2009
Hard to find instructions are located here, look down to the bottom of the page.

http://www.irs.gov/taxpros/providers/article/0,,id=174533,00.html

Death&Taxes (talk|edits) said:

6 March 2009
My software still prints the 8453 if I check that I will be submitting stock information

Jancpa (talk|edits) said:

2009-03-18
RoyDaleOne has the definitive answer, all opinions to the contrary aside.

Just because you don't get called out for doing the wrong thing, you cannot assume that you are therefore doing the right thing.

The IRS requirement that the detail be attached to the 8453 and mailed to them is straightforward.

BeachCPA (talk|edits) said:

18 March 2009
My ProSeries copy of 8453 says not to sign it. I use it all the time.


NWTaxPro (talk|edits) said:

10 October 2009
If you do send in the 8453 with a statement of stock trades attached, what is the best way of summarizing the trades on the electronic Schedule D? Do you fill in the all the lines of schedule D and then putting one "summary line" of the rest of the trades on schedule D-1?

Wonder Woman USA (talk|edits) said:

10 October 2009
I put in two lines (per brokerage account) for stock sales: one for short-term and the other for long-term. (Any trades for which the brokerage does not have basis info will go on their own lines, and the total sale amounts adjusted).

Belle (talk|edits) said:

October 10, 2009
Line 2 (short term) and line 9 (long term) on the Schedule D is specifically for reporting transactions from Schedule D-1, which is the attachment info you send in with the Form 8453. I copy the realized gain/loss statements from the brokerage houses, and even highlight the totals that then match back to the subschedule that supports the amounts on line 2 or 9.

(Lacerte software allows direct entry for D-1 input.)

NWTaxPro (talk|edits) said:

10 October 2009
Thanks for the ideas. So just to clarify, I send the D-1 substitute with an unsigned 8453 to the IRS and then file the return with a PIN and an 8879. Correct?


ChrisV2 (talk|edits) said:

6 March 2010
This question has been bothering me for the last couple of years, and I've been doing it the "right" way -- which is time consuming. The office I work in does over 1300 returns each year, and the principal here has been doing taxes professionally for nearly 40 years. I asked him again today -- since it has been available, have you EVER used form 8453 for D-1 continuance. He laughed and said "no" -- always just summarized on one line short term and another line long term (on Sch-D). I asked, have you or any of the clients EVER gotten a letter from the IRS and he said that as long as the sales amount was at or above the total reported on the 1099-B then they have never been queried by the IRS.


Guess what I'm not doing anymore.

JoeyZazza (talk|edits) said:

22 February 2012
My tax software is not letting me use 'various' as a day, well I can print it but then not e-file. When aggregating returns can you use various as a day and then just mark it as long-term/short-term?

Sorry, answered my own post: Yes, you can use various for e-filing, guess I have to ask Drake about their error code. http://www.taxalmanac.org/index.php/Discussion:Are_dates_required_on_Schedule_D%3F

Death&Taxes (talk|edits) said:

22 February 2012
Are you using various for sales? My software will not permit various for date of sale, but for purchases that is okay. An error pops up if you use various for purchases and do not desinate long or short.

CathysTaxes (talk|edits) said:

22 February 2012
My software lets me use various, but then it always marks it as a long term capital gain.

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