Schedule D in the Real World
• All audio is streamed through your computer speakers.
• There will be several attendance verification questions
during the LIVE webinar that must be answered via the
online quiz at the conclusion to qualify for CPE.
• Today’s webinar will begin at 2:00pm EDT
• Please note: You will not hear any sound until the
webinar begins.
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Schedule D – In the Real World!
Presenters:
Kathy Hettick, EA, ABA, ATP and
Gene Bell, EA, ATA, CFP®
Date: June 25, 2015
Time: 2:00-3:00 PM Eastern
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Learning Objectives
Upon completion of this course, you will be able to:
• Report the sale of a capital asset on Schedule D
• Determine when to use Form 8949
• Recognize the reportable aspects of a 1099-B
• Apply the process of reporting correct information for the
sale of a capital asset
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Schedule D
Summary Information
Form 8949
Covered vs. Non Covered
Basis, basis & more basis
Adjustment Codes
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Schedule D
Form 1099-B (Proceeds From Broker and Barter)
Form 1099-DIV (Capital Gain Distributions)
Form 4797 (Business Assets)
Form 6252 (Installment Sales)
Form 8824 (Like-Kind Exchanges)
Form K -1 (Partnerships, S Corps, Estates, Trusts)
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Why do we have a
Schedule D?
Tax code complexities
Capital gains tax rates
Netting rules
Tax computation worksheet
Capital loss carryforward
Prior year due diligence
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What is a Capital Asset?
IRC §1221
Any property held by a taxpayer, except.....
Inventory
Accounts or notes receivable from trade or business
Depreciable property used in trade or business
Real estate used in trade or business, or rental property
Supplies used in a trade or business
US Govt publications
Commodities-derivative instruments held by dealer
The right to receive future ordinary income payments
Self created copyrights, literary, musical or artistic comps, etc.
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What is a Capital Asset?
Malat v. Riddell, 383 U.S. 569, 572 (1966)
U.S. Supreme Court Case
Differentiate the profits and losses from
everyday business operations and the long
term realization of appreciation.
United States v. Winthrop, 417 (1969)
7 factors for consideration
No one factor controls
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What is a Capital Asset?
Suburban Realty Co. v. U.S. 615 (1980)
1) Was the taxpayer engaged in a trade or
business?
2) Was the taxpayer holding the property
primarily for sale in that business?
3) Were sales “regular and ordinary”?
Flood v. Commissioner (2012)
T.C. Memo 2012-243
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Type of Sale
Directly on Schedule D
Form 8949
Covered Securities
≤1 year - Part I, line 1a
>1 year - Part II, line 8a
Only if adjustment necessary
Non-Covered Securities
≤1 year - Part I, Box B
>1 year - Part II, Box E
Personal Use Property
Sold at a Gain
≤1 year - Part I, Box C
>1 year - Part II, Box F
Form 4797
Depreciable trade or business
property
Sold at a Gain
≤1 year - Part II, line 10
>1 year - Part III –
§1245, §1250
Depreciable trade or business
property
Sold at a Loss
≤1 year - Part II, line 10
>1 year - Part I, line 2
IRC §179 recapture
Part III - §1245, §1250
Nonbusiness bad debt
Part I, line 1
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Holding Period
IRC §1222
Short term - one year or less
Long term - more than one year
Begins on the day after the day the property
was acquired
Includes the date of disposition
Inheritance is always long term
Non-business bad debt is always short term
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Capital Gains Taxes
Short Term:
Gains are taxed at the ordinary tax rates
Long Term Rates:
0%
15%
20%
25%
28%
If ordinary tax rate is 10%, 15%
If ordinary tax rate is 25%, 28%, 33%, 35%
If ordinary tax rate is 39.6%
Un-recaptured Section 1250 gain
Collectables (held more than 1 year);
Section 1202 QSBS gain
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Capital Gains Taxes
Net Investment Income Tax
3.8% Additional Tax!
Applies when MAGI is $250K (MFJ),
$200K (S), $125K (MFS)
Capital Loss
Deductible up to $3,000 per year
Additional is carried forward
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Form 8949
New form effective as of 2011
IRS matching program
Separate pages for short term & long term
Covered vs. Non Covered
Can summarize and attach details
Sale of personal residence
Reportable or non reportable losses
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Form 1099 B
How Do I Read It
Basis issues
Didn’t get it
Correcting it
Consolidated forms
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Adjustment Codes
Correcting reporting errors
How do I use them?
When do I use them?
Where do I put them?
Will they cause IRS correspondence?
Asking the right questions to get the right answers
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Basis Issues
Getting it right when the form is wrong!
Use adjustment codes
Inherited property
Basis is FMV at date of death
Gifts
Basis is lesser of FMV or donor’s basis
Burden of proof…. WHO?
* Preparers * Clients * Brokers
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Who’s Doing the Return?
Preparers beware
Software input \ tax return output
Check the result of your input
Did it show up where expected
Be diligent
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Practice Management Tip
Ask yourself, have you
Been Reasonable
Been Prudent
Been Ethical
Asked the Right Questions
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Upcoming Webinars and
Presentations by
Kathy Hettick & Gene Bell
Catch us at the 2015 IRS Tax Forums
National Harbor, Denver, Atlanta, San Diego & Orlando
Check out all the great information and get the member
discount;
http://www.nsacct.org/education-events/irs-tax-forums
Be sure to check out our webinar schedule at;
http://webinars.nsacct.org/
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Thank you for participating in this webinar.
Below is the link to the online survey and CPE quiz:
http://webinars.nsacct.org/postevent.php?id=15875
Use your password for this webinar that is in your email confirmation.
You must complete this survey and the quiz or final exam (for the
recorded version) to qualify to receive CPE credit.
National Society of Accountants
1010 North Fairfax Street
Alexandria, VA 22314-1574
Phone: (800) 966-6679
members@nsacct.org
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