Basis and new 1099B reporting requirements

[BulldogTom]

Taxpayer had a revokable living trust. At his death, his substantial portfolio of stocks transfered to the now irrevokable trust. The Brokker has sent out this years 1099B with all the basis information going back to the late 1990's. Missing for anything from the early 1990's. Basis should be DOD. Right? So what happens when the IRS gets this 200K of trades with incorrect basis and missing basis and can't match it up?

I smell an audit coming.

tom

Lodi, CA

[Lion EA]

You use the codes and adjustment columns. But, check on the 1099B as it probaby has "gratuitous" reporting to client and not to IRS; then you just report your true basis as always.

[joanmcq]

And if the basis was reported to the IRS, you can check a box that says, "basis is incorrect".

[BulldogTom]

Client came in and we got on the phone with Chuck. I asked why, when the account was held by them prior to DOD, and then transfered by them to the control of the trustee, the basis information was not reported at DOD? They obviously knew what happened because they did all the paperwork.

Chuck's answer was interesting. "It is your job as the tax preparer to determine the basis and if DOD is the appropriate date to measure basis."

I think technically, he is right. He then went on to explain that when the department that deals with trusts and estates came in on monday morning, the trustee could call and get the DOD "valuations" (Chuck did not say basis) if we would like them, assuming we had decided to use that date to establish basis.

What an interesting future we have with what was such a simple form.

Tom

Lodi, CA