Mastering 1099-B Reporting on Schedule D and Form 8949: Meeting Capital Gains Basis Reporting Challenges

Five years after the IRS began requiring brokers to report basis in securities sold by U.S. taxpayers during a calendar year, tax advisers continue to struggle with key tax compliance complexities. While some tax reporting for transactions involving covered securities is straightforward, advisers are often faced with complex calculations and time-consuming data collection and analysis.

Taxpayers are required to reconcile basis information provided by brokers on Form 1099-B with their calculations of gains and losses on Schedule D using Form 8949. However, this reconciliation also presents specific complications for tax advisers, particularly in situations where the client is a high-volume trader, has multiple brokerage accounts, has transactions that may have wash sale loss disallowance, or has investments in real estate.

There are numerous other complexities in reporting transactions involving capital assets. Taxpayers receiving assets through gift or inheritance can face significant challenges in determining basis, especially when the assets are foreign-based. Section 1202 small business stock can also present calculation and reporting issues.

Listen as our experienced panel provides a thorough and practical guide to the challenges of Form 1099-B reporting on clients’ 1040 returns. The panel will outline approaches to properly report capital gains and anticipate potential audit red flags and common cost basis reporting errors.

1. Basis reporting requirements on Form 8949
2. Basis adjustments to information reported on Form 1099-B
   1. Reconciliation of multiple 1099-B Forms
   2. High-volume traders and the mark-to-market election
   3. Bond amortization
3. Basis reporting for real estate
4. Basis in assets received by gift
5. Section 1202 Small Business stock
6. Illustration of reconciliation schedules and basis adjustments

The panel will discuss these and other important questions:

• How should high-volume and professional traders manage their Form 8949 compliance duties? When would a mark-to-market election be beneficial in avoiding wash-sale loss disallowance rules?
• Reporting real estate transactions on Form 8949 and Schedule D
• Reconciling multiple brokerage accounts to avoid wash-sale loss disallowance
• Reporting basis discrepancies in the adjustment columns of Form 8949

Learning Objectives

After completing this course, you will be able to:

• Identify sources of information for making basis reporting adjustments on Form 8949
• Determine when a volume trader should make a Section 475 mark-to-market election to avoid wash sale loss disallowance
• Discern how to create a reconciliation schedule for multiple brokerage accounts reported on separate Form 1099-B reports
• Recognize when wash sales across different brokerage accounts need to be reported on Schedule D
• Reporting sales within a publicly traded partnership

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of capital gains calculations, recognizing basis reporting on a Form 1099-B; familiarity with mark-to-market election rules and wash sale disallowance rules, and distinguishing between dealer and investor for purposes of evaluating real estate activities

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).