Schedule D reporting via broker summary

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Filing Schedule D separated into short and long term summary totals, with a comment to “see attached” that points at a provided broker supplied detail was officially deemed "not acceptable" in the 2005 Schedule D instructions. Page D-3 specifically indicates that entering numbers with a statement to see the attached schedule is not acceptable.

Now that the IRS is specifically on the record prohibiting this option in the instructions, it would seem continuing to use this techniques raises a number of risks, including the potential (under Regulation §1.6011-1(b)'s use of required forms admonition) for the taxpayer to be deemed to have not filed a return, as well as an inability to claim adequate disclosure of a position for purposes of avoiding the substantial understatement penalty (Revenue Procedure 2005-75 requires that IRS instructions on filling in forms be followed in order to have adequate disclosure of a return position.

--Edzollars 21:43, 30 December 2005 (CST)

Prior to this "clarification" to the Schedule D instructions, the following seems to summarize the status of this technique.

Questions to IRS agents have received no response which seems to suggest that though it is not officially condoned, it is acceptable and previous inquiries by the IRS have been successfully supported with the provided basis information.
I filed for TY2003 using TurboTax electronic filing, having downloaded my Schedule D data from my brokerages. This apparently sends each individual stock-lot sale to the IRS, as opposed to a summary of each equity's long- and short-term gains and losses. This seems to have confused the IRS, because I was audited. From what I received, it appears (and this is just a guess on my part) that the IRS computers did not match up the many sold lots transmitted by TurboTax as part of Schedule D with the summaries reported via Forms 1099. So it may be best to just send the IRS a summary, because that's apparently what they get from the brokerages. This is just an anecdote, your results may vary. But I'm going to be careful about what gets sent next year. - Rlw 14:11, 6 Oct 2005 (CDT)

You need to be certain you include detail information concering each transaction as required on schedule D. The detail must total to match all 1099B's since this is the key figure that must be accounted for on the tax return. The IRS has recently reported they will accept attached statements if they supply all the infomation required for each transaction. Unfortunately cost basis statements provided by investment firms often do not total to the gross sales amount listed on form 1099B, and they often do not include cost basis for all items. In most cases a careful review and listing of each 1099B transaction is necessary to produce an accurate schedule D. I often place high volume schedule D transaction returns on extension, and I have lost one client recently due to the high cost of producing these returns. This form continues to be a problem if accurate reporting is desired.

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