BROKERS
Brokers have just over a year to gear up for a new reporting rule:
They must list on 1099-B forms the tax basis of stock sold by customers. The first reports are due on sales of stocks purchased after 2010. Form 1099-B will be revised to reflect the new requirement. Under newly proposed regulations, for sales of stocks bought after 2010, brokers also will have to report if the gain or loss on the sale is long term or short term and if the wash-sale rule applies to disallow a loss. A loss barred by the wash-sale rule increases the tax basis of the replacement stock. And when customers move stock bought after 2010 to another broker, the transferring broker must report the basis to the new broker.
The basis reporting rules are phased in for other types of securities. They’ll apply to sales of mutual fund shares purchased after 2011 or stock received after 2011 in connection with a dividend reinvestment plan. And for the first time, S firms will get 1099-Bs for sales of stock and other securities bought after 2011.
A reminder on the deadline for brokers to issue 2009 tax statements:
The due date is Feb. 16, 2010. In 2008, Congress changed the deadline from Jan. 31 to Feb. 15 for several forms: 1099-Bs, 1099-S’s and any 1099-MISCsthat show payments of lawyer fees or payments by brokers of substitute dividends or tax-exempt interest. This also applies to annual composite reporting statements that brokers send to clients, including 1099-DIV and 1099-INT forms that normally are part of those statements. Issuers get an extra day because Feb. 15 is a holiday.
Brokers have just over a year to gear up for a new reporting rule:
They must list on 1099-B forms the tax basis of stock sold by customers. The first reports are due on sales of stocks purchased after 2010. Form 1099-B will be revised to reflect the new requirement. Under newly proposed regulations, for sales of stocks bought after 2010, brokers also will have to report if the gain or loss on the sale is long term or short term and if the wash-sale rule applies to disallow a loss. A loss barred by the wash-sale rule increases the tax basis of the replacement stock. And when customers move stock bought after 2010 to another broker, the transferring broker must report the basis to the new broker.
The basis reporting rules are phased in for other types of securities. They’ll apply to sales of mutual fund shares purchased after 2011 or stock received after 2011 in connection with a dividend reinvestment plan. And for the first time, S firms will get 1099-Bs for sales of stock and other securities bought after 2011.
A reminder on the deadline for brokers to issue 2009 tax statements:
The due date is Feb. 16, 2010. In 2008, Congress changed the deadline from Jan. 31 to Feb. 15 for several forms: 1099-Bs, 1099-S’s and any 1099-MISCsthat show payments of lawyer fees or payments by brokers of substitute dividends or tax-exempt interest. This also applies to annual composite reporting statements that brokers send to clients, including 1099-DIV and 1099-INT forms that normally are part of those statements. Issuers get an extra day because Feb. 15 is a holiday.
www.BusinessLately.com
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