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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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