Tax Reporting Tips  Estimated Reading Time : 10 minutes…

© 2007 by Henry Gage, Jr., founder of www.TradeAccountant.com, all rights reserved.

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¨  Tax Tip 5: Have Someone Else “Just Do It” For You:

If all this is too complex and you just want to get it done then send this series of documents to your Tax Preparer and ask them to figure it out.  They can follow the steps.

If you find you already know all this then congratulations, you are already among the best.  Please send a note to support@tradeaccountant.com and share your insights.

Action Step - If you want to create your own Schedule D take a look at this IRS guidance:

http://www.irs.gov/pub/irs-pdf/i1040sd.pdf
pg D-6: Instead of reporting your transactions on Schedules D and D-1, you can report them on an attached statement containing all the same information as Schedules D and D-1 and in a similar format.”

To correctly fill a Schedule D form you will need the following for each trade:

1) The description of the investment; example: XYZ Corp. 100 shares
2) The data acquired
3) The cost basis (quantity * price paid); example: $2,800.00
4) The sales proceeds (quantity * sale price); example: $3,000.00
5) The date sold
6) Gain/Loss: Sale – Cost; example: 200.00
7) Wash Adjustment (if the position was required in 30 days): disallowed amount

By the way, in general you can’t just enter a summary total.  If you have been doing this for years it just means it has not been discovered during their audit process.  This could be an expensive short cut.

Note: According to http://www.irs.gov/pub/irs-pdf/i1040sd.pdf
 “pg D-6: You must enter the details of each transaction on a separate line of Schedule D.  If you have more than five transactions to report on line 1 or line 8, you can report the additional transactions on Schedule D-1.”

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About the Author:

Henry Gage, Jr. is the Architect of TradeAccountant Pro, a Gain/Loss tax reporting solution with Schedule D and Wash Sales plus export to tax software or print to paper.  TradeAccountant can Sync import data with one click and includes reconciliation tools.  For more information...
Visit: www.tradeaccountant.com.  Or send e-mail to: support@tradeaccountant.com