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UPDATE: Agreement with IRS on Brokerage statements and Form 1099-B

posted Jan 19, 2013, 5:57 PM by Wayne Culp   [ updated Jul 8, 2013, 1:41 PM ]
CyberTax 13-4: Updates and interpretation of  earlier post

Brokerage statements:  If all capital sales transactions from a brokerage statement are listed individually on the Capital Gains Worksheet, there is no need to send a copy of that brokerage statement to the IRS.  If a preparer summarizes all or part of the transactions on a brokerage statement, then a copy of that brokerage statement must be sent to the IRS either as a PDF file attached to the return or as a paper copy attached to IRS Form 8453.  When using the Form 8453, copies of any Forms 8949, generated in Taxwise, must be printed and attached along with the required brokerage statement.

The IRS agreed a few days ago that we no longer need to attach any brokerage
statements when it is convenient to enter summary totals on the Capital Gain
WKT. No 8453 processing. No scanned PDF files. No attached copies to paper
returns. No situation that requires copies of brokerage statements.

The entries need to be made on Cap Gn WKT for the totals for each category A-ST,
B-ST, A-LT, B-LT, and cross-checked with the totals on the brokerage statement.

One method is to enter the Brokerage name as the Description for all lines, up
to four if there are transactions of all types. I prefer to add the type, for
Fidelity B-ST B VARIOUS 01/01/2012 4000 2000
because that will make it easier for the QR person to identify the section of
the report to verify.

Note that in my previous post on this subject I gave links to different sample
reports for 2012 that indicate that most, if not all, brokers will now print a
page for each category, with clear headings at the top for A (Reported) ST or
LT, or B (not reported) ST or LT.

8453 processing is still required for the other areas that need signatures: 8832
(release of exemption), Power of Attorney, and also for 1098-C for donation of

Some of these areas have a method in TaxWise to indicate that you are attaching
a scanned PDF file with the signed document. I have asked for a procedure that
includes QR for those sites where there is a scanner and an ability to store
encrypted files. More later.

Lyn McClure WA DC-10+21, TC, Inst, etc and co-moderator of T-VOG