Taxes (TAX)

[cintrix]

I'm waiting and not happy about it. Etrade was able to get me my 1099's on time, why couldn't Penson? Then I just realized that in my mutual fund account I took 6k out of it and they are showing gross proceeds and not cost basis because the company was switched over from the original one and they have no cost basis history for me. Now I have to go through all my statements from years ago and figure out what the heck the cost basis is.

[ypsiCPA]

I'm not holding any returns for that. But some clients may be waiting.

[cintrix]

Has it affected you other than that one client? I wouldn't want to be a tax preparer if a large part of my clientele used Penson.

[ypsiCPA]

More on the delayed 1099-B's

http://www.usatoday.com/money/perfi/taxes/story/2012-02-28/delays-in-brokerages-sending-taxpayers-tax-forms/53292704/1

[cintrix]

thanks I will have to look into that

[ypsiCPA]

Form 5695, page 4

http://www.irs.gov/pub/irs-pdf/f5695.pdf

[cintrix]

Steve, are there any energy credits for converting home heating to natural gas in 2011?

[cintrix]

I have to wait for them. Too many trades to guess and then I don't want to have to deal with it and do an amended return. I can't believe they were granted such a long extension. That gives their customers a month to file if they want to get it in on time.

[ypsiCPA]

Penson said accounting problems. I have a client affected by that, filed without waiting for them. If there's correspondence from IRS I'll deal with it.

[cintrix]

I was just told by my broker that Penson was given an extension for 1099's until March 15th. How is that allowed? I know all the other brokers were issued extensions until Feb 15th and that wasn't enough for them?

[cintrix]

Ah, don't you feel sorry for him?

[ypsiCPA]

Facebook's Zuckerberg may face $2 billion tax bill

http://money.cnn.com/2012/02/07/technology/zuckerberg_tax_bill/index.htm

[ypsiCPA]

Exporting Stock Sales from TD Ameritrade

1. Log into TD Ameritrade
2. Accounts | Gain/Loss
3. Under the Realized Gain/Loss tab, YTD
4. Change tax year to 2011
5. View
6. At top right, "Export data"
7. Save (to desktop)
8. xlsx file contains transaction details, suitable for e-mailing to preparer

[ypsiCPA]

Probably your brokers have info you can download to Excel, which may be easier to work with than Quicken.

(yes, trades with reported basis must be separated from trades without reported basis)

[cintrix]

So they are going to have to be separated, right? That will be a problem for me since all my trades are in a Quicken and they are only separated by long and short term, not by certain stocks reporting basis while some aren't. Maybe I can just subtract the amount that wasn't reported and put that on a separate line?

[ypsiCPA]

Those go on the new form, with the box checked that basis wasn't reported on 1099-B. Just like the old Schedule D.

[cintrix]

just the new rules with the cost basis - i am clueless on how i am going to separate trades that i had prior to this year where cost basis doesn't get reported - am i going to have to separate them from the unreported cost basis?

[ypsiCPA]

Nothing major for 2011. Medicare tax on unearned income kicks in for 2013 if nothing changes.

http://www.aicpa.org/Publications/TaxAdviser/2011/July/Pages/fava_jul2011.aspx

[cintrix]

ah, interesting - have u gone to any tax seminars on the new rules?

[ypsiCPA]

Instructions not yet available. I'm guessing if you disagree with 1099-B (be prepared to prove your numbers)

[cintrix]

adjustments to gain or loss if any? what is that? amounts that maybe were purchased in a different yr and didn't have to be reported to the irs?

[ypsiCPA]

New form to accommodate basis reported on 1099-B

http://www.irs.gov/pub/irs-pdf/f8949.pdf

[cintrix]

I rarely have long term gains - mainly short term. Still curious on how we have to show the cost basis with the new rules.

[ypsiCPA]

Capital gains rules for 2012 are the same as 2011. But in 2013, capital gains tax rate is likely to rise, from 15 to 20%. Also, there will be a 3.8% Medicare tax on investment income.

It might make sense to sell a winning long-term stock (if you're so blessed as to have one) before 2013, and immediately buy it back.

Wash sale rules apply to losses, not to gains.

[ypsiCPA]

Retirees can make Qualified Charitable Distributions from an IRA; income from distribution is not included on the return - this even works for taxpayers who don't itemize. Also, reduced AGI can result in less taxable social security.

Scheduled to expire the end of this year, may be extended.

http://www.irs.gov/retirement/article/0,,id=234258,00.html

[cintrix]

ine Tips for Charitable Taxpayers

August 22, 2011 – IRS Summertime Tax Tip 2011-21

If you make a donation to a charity this year, you may be able to take a deduction for it on your 2011 tax return. Here are the top nine things the IRS wants every taxpayer to know before deducting charitable donations.

1. Make sure the organization qualifies Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
2. You must itemize Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. What you can deduct You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. When you receive something in return If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Recordkeeping Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
6. Pledges and payments Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
7. Donations made near the end of the year Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. Large donations For any contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization. It must include the amount of cash and say whether the organization provided any goods or services in exchange for the gift. If you donated property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a deduction for a contribution of noncash property worth more than $5,000, you generally must obtain an appraisal and complete Section B of Form 8283 with your return.
9. Tax Exemption Revoked Approximately 275,000 organizations automatically lost their tax-exempt status recently because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
http://www.taxact.com/tax-information/tax-tips/2011/nine-tips-for-charitable-taxpayers.asp?sc=110105060101

[cintrix]

Eight Tips for Taxpayers Who Receive an IRS Notice

August 24, 2011 – IRS Summertime Tax Tip 2011-22

Every year the Internal Revenue Service sends millions of letters and notices to taxpayers, but that doesn't mean you need to worry. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

1. Don't panic. Many of these letters can be dealt with simply and painlessly.
2. There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
3. Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.
4. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
5. If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
6. If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left part of the notice. Allow at least 30 days for a response.
7. Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. Have a copy of your tax return and the correspondence available when you call.
8. It's important that you keep copies of any correspondence with your records
http://www.taxact.com/tax-information/tax-tips/2011/eight-tips-for-taxpayers-who-receive-an-irs-notice.asp?sc=110105060101

[cintrix]

Oh, ok, sounds fair, thanks.

[ypsiCPA]

Best guess would be the average of the day's high and low.

[cintrix]

If you have a cost basis date, but not the exact price, do you use the high for that day or the closing price?

[ypsiCPA]

For all of $79, you are correct.

[cintrix]

Thanks, but I remembering this correct? Cash contributions were allowed back then without a receipt up to a certain amount but no longer are? Is that right?

[ypsiCPA]

Here's ten year old data, should give you an idea.

http://www.latimes.com/la-avgdeduct,0,750110.story

[cintrix]

That’s because the IRS can tell what the average charitable donation is for a person in your tax bracket.


What is the average charitable donation? What percentage of your salary would that constitute?

[ypsiCPA]

IRS Audit Red Flags

http://kiplinger.com/features/archives/12-audit-red-flags-the-irs-looks-for.html?si=1

[ypsiCPA]

It is all there. Money received for shared expenses is income, and the related expenses are deducted (2% miscellaneous itemized).

[cintrix]

Ok, and I am sure when Steve (mod) drops by he will clarify it for you since he is the expert here.

[jglider]

Think this publication says it all. http://www.irs.gov/publications/p527/ch04.html#en_US_2010_publink1000219164

[jglider]

Won't be charging them rent, only shared expenses. I did find something about renting for non profit but still unsure. Maybe I'll just call my local office.

Told the wifey this would be a mess. GRRRRRR

[cintrix]

Are you charging them rent? The amount they help pay on utilities would be added to the rent amount. If they are not paying rent I would think that technically speaking, their share of the bills counts as rent:

Expenses paid by tenant occur if your tenant pays any of your expenses. You must include them in your rental income. You can deduct the expenses if they are deductible rental expenses. For example, your tenant pays the water and sewage bill for your rental property and deducts it from the normal rent payment. Under the terms of the lease, your tenant does not have to pay this bill. Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income.
http://www.irs.gov/businesses/small/article/0,,id=238662,00.html

[jglider]

Looks like my in-laws will be moving in with me shortly. Ya ok no jokes please. They have offered to share expenses across the board, real estate taxes, utilities etc.

What I'm wondering is if part of this sharing of expenses would be considered taxable on my part as I'll be the one that gets the deduction on the real estate taxes.

Read thru some publications but couldn't find out for sure.

[cintrix]

Estimated taxes for second Q due on Wednesday!

[MuchCompensation]

ypsiCPA Member Profile ypsiCPA Member Level Share Wednesday, June 01, 2011 10:32:21 AM
Re: MuchCompensation post# 536 Post # of 539
Not much you can do, link is to a Turbotax forum

https://ttlc.intuit.com/post/show_full/cc9NkCqrmr4kHwacfArRo0/how-do-i-override-schedule-d-limitation-on-number-of-digits?p=3&q=cost+basis+stock+split+capital+gain+l&s=3

Thank you so much for taking the time and your courteous reply.

Good Luck!!!

MC

[ypsiCPA]

Not much you can do, link is to a Turbotax forum

https://ttlc.intuit.com/post/show_full/cc9NkCqrmr4kHwacfArRo0/how-do-i-override-schedule-d-limitation-on-number-of-digits?p=3&q=cost+basis+stock+split+capital+gain+l&s=3

[MuchCompensation]

Did you have the same problems I did?

MC

[Crazy Money]

I use Turbo Tax...

[MuchCompensation]

Anyone here a expert on Turbo Tax? Seems it wouldn't allow stock amounts of greater than 99,999. Kinda stupid if you ask me.

MC

[ypsiCPA]

IRS is probing donors to non-profits that buy political ads

http://www.usatoday.com/money/perfi/taxes/2011-05-13-irs-nonprofit-gift-tax-political_n.htm

[b4atf]

Thanks ypsi, I never figured out the schedule D and just put in my own numbers. Wish I had seen your post a couple days earlier.
b4

[ypsiCPA]

Capital Gains Tax Rates

In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income. Capital gains are generally taxed at a preferential rate in comparison to ordinary income (26 U.S.C. §1(h)). This is intended to provide incentives for investors to make capital investments, to fund entrepreneurial activity, and to compensate for the effect of inflation and the corporate income tax. The amount an investor is taxed depends on both his or her tax bracket, and the amount of time the investment was held before being sold. Short-term capital gains are taxed at the investor's ordinary income tax rate, and are defined as investments held for a year or less before being sold. Long-term capital gains, which apply to assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets. The reduced 15% tax rate on qualified dividends and long term capital gains, previously scheduled to expire in 2008, was extended through 2010 as a result of the Tax Reconciliation Act signed into law by President George W. Bush on May 17, 2006. This was extended through 2012 by President Barack Obama on Dec 17, 2010. As a result:

In 2008-2012, the tax rate on qualified dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.
After 2012, dividends will be taxed at the taxpayer's ordinary income tax rate, regardless of his or her tax bracket.
After 2012, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).
After 2012, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States