Tax laws changing for selling stocks

[bjl584]

News Headlines

[MonkeyMama]

True.

Thankfully, the IRS had the sense to let taxpayers disagree with the reported cost basis reported by investment custodians. Otherwise this would be beyond a nightmare. (I saw in the article they tried to strike the fear of audit in people who use different numbers. Um, I wouldn't worry about it).

For anyone with a lot of taxable investments, your taxes just go way more complicated though. That is for sure. Schedule D is totally revised - I haven't had the joy of filling one out yet... (Of course, brokerages probably haven't mailed out any 1099s yet, for stock sales. They should start rolling in this week).

[disneysteve]

I think this will be a mess for a while but will be good in the long run. Since it only applies to stocks bought in 2011 or later, we'll still be using the old system for years but eventually it will all fall under the new system. I own stock that I purchased in the late 1980s or early 1990s and I know plenty of people who have owned shares for much longer than that.

It will help avoid problems like the one I had a few years ago when I sold a stock and could not locate the original paperwork with my cost basis. We had to do some digging and estimate when I had bought it to come up with a cost basis. I turned up the paperwork a couple of years later in an old file but I wasn't about to change my return at that point as the amount of money was insignificant. Had the broker had a record of the purchase, that never would have been a problem.

[kv968]

I haven't received my 1099 yet but looking at the forms they have on the broker site it looks as if this new reporting might work out with less for me to figure out.

For example, last December I sold an ETF for a loss but had a wash sale since I had bought it back in January within 30 days of the sale. Therefore I can't claim that loss on my 2011 taxes. I've since sold the ETF again (for a loss ) and the broker has already applied the December losses to the cost basis of the January buy. Saved my from trying to figure it all out. Although I will going over everything just make sure they have it right but from what I see it all looks to be correct.