Out of Scope:
- The basis of a sale is not known and purchase documents not available
- Wash sales not reported on an 1099-B or broker statements
- Sale of anything other than stocks, bonds, mutual funds or a home
- Sale of bonds that mature or are sold with no gain or loss
- Sale of property inherited in 2010 if basis and holding period is not known
- Sale of property received as a gift or inherited if the basis is not known or not based on Fair Market Value
- Like-kind, regulated futures contracts, bartering, installment sales or worthless securities
- 1099-B boxes 10-14 (2009-2011) or 9-12 (2012 and later)
- IRA rollover to an HSA
- Sale of a main home:
- that has been used for business, including rental, after 5/6/1997
- that has “nonqualified use” since in 2009 or later
- where a postponed gain from a previous home or depreciation prior to 5/7/1997 affects the basis
- used for less than 2 years due to job relocation (reduced exclusion)
- that results in a taxable gain (See note for District condition)
- when both spouses do not meet exclusion requirements
- due to foreclosure or bankruptcy
- if taxpayers claimed the first-time homebuyer credit, see below
- Taxpayer subject to the Net Investment Income Tax (NIIT, new in 2013)
Always check the prior year’s tax documents for carryover losses. If we did the return last year, it should appear correctly.
Tax Slayer entry:
Federal Section > Income > Capital Gain and Losses (Schedule D)
Capital Gains and Loss Items:
- Each transaction (or “various”) if a group of transactions must be entered individually.
- There is no need to enter the A-F transaction codes – appropriate questions will produce the codes as the return is produced.
- [TSQuestion] There appears to be no provision for type A and D transaction totals to be entered directly on Schedule D.
- [TSQuestion] How are multiple adjustment codes handled – only one is currently allowed. The current recommendation is to add an “M” after the broker name if another code is also required.
Using summaries from a broker statement:
If the number of sales transactions exceed about 10 and the amounts are summarized by A-F types and short-term and long-term totals:
- Make a copy of (or scan) the broker summary and detailed transaction list pages to submit to the IRS. Up to 5 documents at 5 Mb each can be attached.
- Attach scan at the Federal Section > Income > Capital Gain and Losses > PDF Attachments TS page.
- (ERO reminder: copies of Form 8453, broker statement and relevant 8949 pages go to Austin if not scanned.)
Other Captial Gains Data
- Check the previous year tax return for any short or long carryover losses to enter here.
Sale of Main Home Worksheet:
- See the Sale of Home Scoping Decision Tree to determine if the sale of the home is in scope.
- See the Buying and Selling a Home web page for items on the HUD-1 statement that affect basis or may be deductible. The worksheet has pages that will ask for entry of various purchase and selling expenses and improvements made, etc.
- If it’s the main home, lived in 2 of the last 5 years, the gain is less than the $250K/$500K exclusion and there is no 1099-B or 1099-S, the sale can be ignored.
- If widowed, figure one half the value of the home at the death of the spouse and increase the basis at that time by that amount. Then add in any capital improvements made since that time to figure the new basis. If sold within 2 years of the spouse’s death, the full $500K exclusion can be used. See Pub 523 for a worksheet to help figure the gain or loss.
- If the sale price of the home is more than the exclusion amount, consult with your local coordinator to help determine if the sale is in scope.
- Note: moving expenses are OUT OF SCOPE unless certified for Military.
- If the client took the First-Time Homebuyer credit in 2008,
- a form 5405 is required for each of the TP and SP if the credit was taken in 2008 on a joint return
- the remaining unpaid portion will have to be repaid unless:
- The home was destroyed or condemned, or disposed of under threat of condemnation and a new home was not acquired within 2 years of the event, or
- TP/SP is military/Foreign Service/intelligence and received government orders to serve on qualified official extended duty. (OUT OF SCOPE unless certified for Military)