IRS- SHARE COST BASIS

[James48843]

Brokerages Will Have to Tell IRS What U.S. Investors Paid for Their Stock


Investors who forget what they paid for shares of stock will get help starting next year, courtesy of the Internal Revenue Service.

That’s when the U.S. tax-collection agency will require brokerages to track the cost basis on equities bought after Jan. 1, and send taxpayers and the government an annual form recording it when investors sell shares.

Brokerages already are required to report the proceeds from sales of securities to the IRS. Next year, they’ll also have to provide information on the purchase price, known as the cost basis, of stocks.

“We’ve been really hammering it home with our clients,” said Brian Keil, director of cost basis and reporting at San Francisco-based Charles Schwab Corp. “We expect our clients are going to get a 1099-B form in 2012 and they could have an outcome that they don’t expect.”

More: http://finance.yahoo.com/news/Broke...38.html?x=0&sec=topStories&pos=9&asset=&ccode=

 

[Intrepid_Timer]

My brokerage companies have been doing this for years?

 

[Birchtree]

Mine haven't been reporting so it's been worthwhile to hire a masseuse - now there will be no place to hide. Big Brother wants his money to further redistribution to the entitlement crowd.

 

[Frixxxx]

Mine haven't been reporting so it's been worthwhile to hire a masseuse - now there will be no place to hide. Big Brother wants his money to further redistribution to the entitlement crowd.

I thought that's why you hired a massuese?

 

[tsptalk]

When 40% of Americans don't pay income taxes, they have to make sure they get every penny they can from those who do.

 

[Intrepid_Timer]

I should of added that most of my holdings are short term. I can see how long term holdings would be hard to track. Scottrade sent me a notice asking me what I paid for this one stock I have. I have one share of TCNH and it's price is five cents. I don't even know where it came from..............

 

[Warrenlm]

When 40% of Americans don't pay income taxes, they have to make sure they get every penny they can from those who do.

Ya think they might ever go after the underground barter economy before it becomes too huge? Nah, it's already too huge and untrackable. Better just squeeze the stupid people who do things in writing. Especially those easy salaries.

 

[alevin]

I need to go back and read FairTax again, I'm sure it addressed the barter economy in some fashion.

 

[Warrenlm]

It's supposed to be taxed now but ......it's easier to prove a salary, huh. Seems the Fair Tax concept is that marginal rates will be much lower so the motivation to cheat and not report barter income will be much less. Ha.

 

[Scout333]

I should of added that most of my holdings are short term. I can see how long term holdings would be hard to track. Scottrade sent me a notice asking me what I paid for this one stock I have. I have one share of TCNH and it's price is five cents. I don't even know where it came from..............

IT and members- Watch your brokerage's cost basis computations- They are reasonable accurate but not perfect. Will be harder to get errors corrected since they will have already reported to Uncle. Especially watch stock received by inheritance. You may have a stepped up basis. They usually use first in first out when figuring basis of shares sold. You do have the option of selecting a specific grouping of stock to be sold. i.e. the last shares acquired may have less gain. I'm sure I'm not telling you guys anything new but just check the statements you get very carefully.

Best to all!

 

[Birchtree]

Brother Scout you need to post more often - you've been holding out. Your knowledge demonstrates familiarity.

 

[alevin]

IT and members- Watch your brokerage's cost basis computations- They are reasonable accurate but not perfect. Will be harder to get errors corrected since they will have already reported to Uncle. Especially watch stock received by inheritance. You may have a stepped up basis. They usually use first in first out when figuring basis of shares sold. You do have the option of selecting a specific grouping of stock to be sold. i.e. the last shares acquired may have less gain. I'm sure I'm not telling you guys anything new but just check the statements you get very carefully.

Best to all!

My e-brokerage previously said they only would do first in-first out method, which I kept simple, by only buying 100% or selling 100% of whatever, and I also kept simple by not reinvesting dividends in extra shares, just returning cash to the account to buy something else. BT knows that's not the least expensive way to buy shares, but it's what I could wrap my brain around my first 2 years buying single stocks (tiny accounts).

I just got an email today saying the brokerage is adding utility to the system so can keep better track of cost-basis; to comply with new law. With that, I think I may change and start allowing reinvestment of dividends.