The IRS has introduced a new form for 2011 – Form 8949, Sales and Other Dispositions of Capital Assets. Schedule D-1, which previously served as a continuation attachment that was used to report individual transactions, has been eliminated and Schedule D has been revised to serve as a summary of capital gains and losses.
As indicated by the IRS, many of the transactions previously reported on Schedule D or D-1 must now be reported on Form 8949 in 2011. These include sales or exchanges of capital assets; gains from involuntary conversions, other than casualties or thefts, of capital assets not held for business or profit; and non-business bad debts.
As explained by Jobe Dupree of Bond Beebe Accountants and Advisors, the new Form 8949 coincides with a change in the tax law regarding the reporting of basis. Starting in 2011 stock brokers have to report on Form 1099-B the cost basis of stock in a corporation acquired on or after January 1, 2011. Starting in 2012 cost basis information will be required on the 1099-B for mutual funds and stock in a corporation that is purchased through a dividend reinvestment plan.
Form 8949 has two separate pages or parts. Part I is for short term transactions and Part II for long term. At the top of each part there are three check boxes to choose from. One is for transactions reported on Form 1099-B with the basis reported to the IRS. The second is for transactions on Form 1099-B without the basis reported. And the third is for all other transactions. A separate Form 8949 has to be filed for each box checked.
The total in each part of Form 8949 is transferred to the appropriate line on Schedule D.
There may be cases in which you need to adjust the cost basis as reported on Form 1099-B. As indicated by myStockOptions.com, the basis reported may be incomplete if you sold stocks you acquired from stock grants or through an employee stock purchase plan. The instructions for Schedule D and Form 8949 provide a series of codes that can be entered in column b of Form 8949, with the corresponding adjustment amount reported in column g.
According to the Instructions for Schedule D (and Form 8949), instead of reporting each transaction on a separate line of Form 8949, you can attach a statement, such as a statement from your broker, that contains the same information in the same format. Then you would report the totals from each attachment on Form 8949, according to the box you check.
If you e-file your return and want to use an attachment instead of entering each individual transaction, you must mail the IRS a Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, and attach Form 8949 or a similar statement with the same information.
Sources:
Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, IRS
Form 8949, Sales and Other Dispositions of Capital Assets, IRS
Getting To Know You: The New IRS Form 8949 For Reporting Stock Sales On Your Tax Return, myStockOptions.com
Instructions for Schedule D (and Form 8949), IRS
Jobe Dupree, “IRS Changes to Schedule D and Introduction of New Form 8949”, Bond Beebe Accountants and Advisors
Schedule D, Capital Gains and Losses, IRS
Reference:
- Publication 544, Sales and Other Dispositions of Assets: www.irs.gov/formspubs/article/0,,id=239592,00.html
- Publication 550, Investment Income and Expenses: www.irs.gov/formspubs/article/0,,id=242140,00.html
- Publication 551, Basis of Assets: www.irs.gov/formspubs/article/0,,id=244469,00.html
