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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
Schedule D
Summary InformationForm 8949Covered vs. Non CoveredBasis, basis & more basisAdjustment Codes
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Schedule DForm 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 rulesTax 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.....InventoryAccounts or notes receivable from trade or businessDepreciable property used in trade or businessReal estate used in trade or business, or rental property Supplies used in a trade or businessUS Govt publicationsCommodities-derivative instruments held by dealerThe right to receive future ordinary income paymentsSelf 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 CaseDifferentiate the profits and losses from
everyday business operations and the long term realization of appreciation.
United States v. Winthrop, 417 (1969)7 factors for considerationNo 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 SaleDirectly on Schedule
DForm 8949 Form 4797
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 PropertySold at a Gain
≤1 year - Part I, Box C >1 year - Part II, Box F
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 PeriodIRC §1222
Short term - one year or lessLong term - more than one yearBegins on the day after the day the property was acquired Includes the date of dispositionInheritance is always long termNon-business bad debt is always short term
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Capital Gains TaxesShort Term:
Gains are taxed at the ordinary tax rates
Long Term Rates: 0% If ordinary tax rate is 10%, 15% 15% If ordinary tax rate is 25%, 28%, 33%, 35% 20% If ordinary tax rate is 39.6% 25% Un-recaptured Section 1250 gain 28% Collectables (held more than 1 year);
Section 1202 QSBS gain 12
Capital Gains TaxesNet Investment Income Tax 3.8% Additional Tax!
Applies when MAGI is $250K (MFJ), $200K (S), $125K (MFS)
Capital LossDeductible up to $3,000 per yearAdditional is carried forward
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Form 8949New form effective as of 2011IRS matching programSeparate pages for short term & long termCovered vs. Non CoveredCan summarize and attach detailsSale of personal residenceReportable 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 CodesCorrecting 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 IssuesGetting it right when the form is wrong!
Use adjustment codes
Inherited propertyBasis is FMV at date of death
GiftsBasis is lesser of FMV or donor’s basis
Burden of proof…. WHO? * Preparers * Clients * Brokers
Who’s Doing the Return?
Preparers bewareSoftware input \ tax return outputCheck the result of your inputDid it show up where expectedBe diligent
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Practice Management Tip
Ask yourself, have you
Been ReasonableBeen PrudentBeen EthicalAsked the Right Questions
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Upcoming Webinars and Presentations byKathy Hettick & Gene Bell
Catch us at the 2015 IRS Tax ForumsNational Harbor, Denver, Atlanta, San Diego & OrlandoCheck out all the great information and get the member discount; http://www.nsacct.org/education-events/irs-tax-forumsBe sure to check out our webinar schedule at; http://webinars.nsacct.org/
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 Accountants1010 North Fairfax Street
Alexandria, VA 22314-1574Phone: (800) 966-6679
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