Form 1099-B

[ILLMAS]

I have had two TP that transfer their stocks to another broker and they get a Proceeds from broker, worst of all the client doesn't even know what they did, they want for you to find out. From the 1099-B it looks so much like if the stocks were sold, and there is no reference that it was exchanged. Getting tired of this!!! Just had to get this off my chest.

[David1980]

I'll preparer the Schedule D with $0 basis and short-term "various" for date acquired. It usually convinces the taxpayer to find the info... or to bitch at their broker so that the broker caves in and gives them the info.

[grandmabee]

they were sold and purchase new. goes on D need basis

[RitaB]

People who don't understand investments should not be buying them, eh?

This is off topic, but one of my clients announced to me today that he is "gonna sell his mutual funds when they peak", and buy apartment buildings to rent out cause he just talked to a guy at the BARBER who recently built a bunch of apartments and they're all rented out.

Who knew it was that easy? Maybe my client should be a BROKER since he is somehow going to know when the funds are at their peak. Too bad he didn't get his hair cut in May...

[ILLMAS]

In these two case I had, both TP transfered the stock to another broker in 2008, however they received a 1099-B Broker Proceeds, Barter and Exchange Transaction and if you look at the date of the transfer appears under box 1a "Date of Sale", logically one thinks they were sold, number one because it doesn't tell you it was a transfer or exchanged nowhere on the form. I guess these two particulary brokers don't give enough information to let the tax preparer know they were exchanged and like I mentioned earlier the client is even worst, doesn't know nothing about their account.

I promise next time I get another client that transfered or exchanged stocks and it is not clear on the 1099-B, I will put zero cost and calculate a gain :-) at no charge for Sch D.

[JohnH]

I think the brokerage houses intentionally create confusion. This info isn't usually that difficult to trace, IF every broker provides original cost basis. But they somehow omit that info when it counts the most, unless the client has dealt with them in-house for the entire transaction. It appears that when a client leaves, many brokerage houses like to take a parting shot at them by not providing basis info with the transfer.

I also think they tend to bury basis info so the client has much more trouble figuring out their overall gain/loss performance over time. Their statements tend to give reliable info only on a year-to-year basis, not cumulative.

[jasdlm]

If you get the statement for the month of the transfer from the receiving broker, you should be able to tell whether the shares were journaled (transfered in kind) or there was an actual sale. If there was an actual sale, what you will see transferring is cash (and then you should see new purchases). The second method would result in larger commission income for the receiving broker (and possibly also for the selling broker). Usually, if the shares are transferred in-kind, you will see the shares appear in the new brokerage with a 'transferred from . . .' memo.

[fredazcpa]

In these two case I had, both TP transfered the stock to another broker in 2008, however they received a 1099-B Broker Proceeds, Barter and Exchange Transaction and if you look at the date of the transfer appears under box 1a "Date of Sale", logically one thinks they were sold, number one because it doesn't tell you it was a transfer or exchanged nowhere on the form. I guess these two particulary brokers don't give enough information to let the tax preparer know they were exchanged and like I mentioned earlier the client is even worst, doesn't know nothing about their account.

I promise next time I get another client that transfered or exchanged stocks and it is not clear on the 1099-B, I will put zero cost and calculate a gain :-) at no charge for Sch D.

Is the 1099B from the new broker dealer or the old one. Either way there was a sale that took place and you will need cost information

When I transfere accounts from another broker, you use an ACAT or account transfere, which is a in kind transfere. nothing is sold or bought. I do not make a cent off of the transaction. Some items that are held in brokerage accounts can only be transfere buy selling, but those are rare. This sounds like the new broker wanted to make some $$$ and sold the old stuff out for new stuff. Either that or the new broker does not what the H*** he/she is doing.

brokers like to use the word "exchange" instead of Sale, becasue clients know that they will be commissons and taxes due on sales, but not on "exchange".

Brokers that do not tell the client what is up, should not be in the buisness, or a client that does not understand what is happening should not be buying and selling in the market.

[jasdlm]

Hey, Fred, are you Series 7 licensed? I'm 7 and 24.

[JRS]

When I transfere accounts from another broker, you use an ACAT or account transfere, which is a in kind transfere. nothing is sold or bought. I do not make a cent off of the transaction. Some items that are held in brokerage accounts can only be transfere buy selling, but those are rare. This sounds like the new broker wanted to make some $$$ and sold the old stuff out for new stuff. Either that or the new broker does not what the H*** he/she is doing.

brokers like to use the word "exchange" instead of Sale, becasue clients know that they will be commissons and taxes due on sales, but not on "exchange".

Brokers that do not tell the client what is up, should not be in the buisness, or a client that does not understand what is happening should not be buying and selling in the market.

I have dealt with a few clients who have changed brokers, including my wife (who is a heavy trader) and I agree with fredazcpa. I have never seen the situation you are describing. I have seen many ACAT's, (with the $100 fee), but nothing like you are describing. I try to make my clients research their investments and really question their brokers or advisors. Case in point where research, questions or a phone would have saved some bucks. Client invested in gold bought it low, sold it high and told me his captial gains tax was zero and why was I making him pay 28% in taxes on a captial gain. Another great thing the markets are selling are the ETFs that are actually partnerships. Phone call, "What's a K-1?"

But all is not lost. Supposedly by 2011, the following new rules will take affect:

The new IRS rules require 1099-Bs to also include adjusted cost basis and short-term versus long-term holding periods. But the IRS is still not requiring brokers to provide a complete trade tax accounting, including options, wash sales and more.

Although this is a big step forward, it’s still not the complete tax information a trader needs to simply attach to their tax returns. Plus, the new rules are not mandatory until 2011, and although some brokers will early adopt them, others will not.

Sorry I am ranting, but it irkes me that people will not learn what they are doing when investing and don't have a clue what they have done and expect us to make it right and blow up when we have to charge them for it.

[RitaB]

I find that clients take it out on us no matter what.

Had a church friend who did some exchanging of her 14 year old twins funds in June. No info on the 1099-B about basis. Of course, she is clueless, and in denial that there should be anything that I need. After all, we just "switched 'em over to the other fund."

Called advisor who faxed me info. Of course, there's a gain. Those $%^& 8615 forms were murder. Each twin owed $192.

I explained to her again. An exchange is a sale and a purchase. Sent her email quoting Taxbook:

Here's from one of my tax guides: Transfer of mutual fund shares. Any exchange of shares in one fund for shares in another fund is treated as a sale. This is true even if shares in one fund are exchanged for shares in another fund within the same family of funds. Author's Comment: This is a source of confusion for clients. The investment community may use the terms "transfer" or "exchange," but for tax purposes the transaction is a sale and a purchase.

I charged her $200 for four returns, two with Form 8615. She STILL called me at home: "Let me get this straight, if we had not switched funds, we would not be paying this tax..." Arghhhh!!!! I gotta get some new friends.