1099 Cap Gain

[mcbreck]

Working with a law firm and their tax attorney is insisting that all returns with a Schedule D MUST have a copy of the 1099 attached. Does anyone on here still do that? He's insisting it's an IRS requirement and trying to draw red flags against me with other partners and I haven't attached 1099s in 15 years probably.

[Lee B]

I have been in my current practice for over 30 years and I have never heard of this requirement

[BulldogTom]

34 minutes ago, mcbreck said:

Working with a law firm and their tax attorney is insisting that all returns with a Schedule D MUST have a copy of the 1099 attached. Does anyone on here still do that? He's insisting it's an IRS requirement and trying to draw red flags against me with other partners and I haven't attached 1099s in 15 years probably.

Ask him for the regulation that requires it.  If he can produce the IRS guidance, then give it to him. 

I assume it is a partnership return like most law firms.   Everything he needs for his personal return should be included on the K-1.   Not sure why he wants the actual 1099B.  As a partner in the firm, he should be able to get a copy from the partner who handles the PS investments and it is probably discussed at partnership meetings.   Weird.

Tom
Longview, TX

[mcbreck]

1 hour ago, BulldogTom said:

I assume it is a partnership return like most law firms.  

This is 1040's for clients. He's just being a jerk.

[Slippery Pencil]

Not a requirement.  He has no idea what he's talking about.  Decades ago preparers would attach the 1099 and put "see attached" on the Sch D instead of typing in dozens or hundreds of trades.  Since the 8949, that's not required.  Even before the 8949, I stopped attaching the 1099 and just posted summary totals on the Sch D.

[Lion EA]

Show him the Form 8949 instructions, especially pages 3-4 with exceptions to listing everything on Form 8949 and the sentence, "If you choose to report these transactions directly on Schedule D, you don't need to include them on Form 8949 and don't need to attach a statement. For more information, see the Schedule D instructions." If he doesn't agree, he's a lawyer, ask him to show you the code section.

[Jim Oh Bkkr]

I seem to remember that you used to have to attach a 1099 IF there was tax withheld, but even that stopped many years ago.

[mcbreck]

17 hours ago, Lion EA said:

Show him the Form 8949 instructions, especially pages 3-4 with exceptions to listing everything on Form 8949 and the sentence, "If you choose to report these transactions directly on Schedule D, you don't need to include them on Form 8949 and don't need to attach a statement. For more information, see the Schedule D instructions." If he doesn't agree, he's a lawyer, ask him to show you the code section.

I've seen where some claim if you put it on the 8949 and not on the Schedule D itself and have summary totals of non-basis given trades, you should include it. I don't agree but that's what they are saying. I can't remember the last time I didn't itemize out the non-basis trades as there are rarely more than 2-3 in a year for clients.

[Lion EA]

Have your client make his broker send you a spreadsheet to import.

[Abby Normal]

On 2/21/2023 at 2:25 PM, mcbreck said:

This is 1040's for clients. He's just being a jerk.

The individual did not receive the 1099, the partnership did. The 1040 just has a K1 that has to be entered.

The Sch D instructions do say to attach detail, but I've never seen that requirement in the code, regs, or rulings. And, like everyone else here, I've only been entering totals for many years.

Also, I believe no one at the IRS ever looks at attachments, even if the return is reviewed.

[Slippery Pencil]

8 hours ago, Jim Oh Bkkr said:

I seem to remember that you used to have to attach a 1099 IF there was tax withheld, but even that stopped many years ago.

I believe paper filed federal returns are required to have documents with withholding attached.  Some states just have a schedule of withholding and no longer require the documents be attached.

[Slippery Pencil]

4 hours ago, Lion EA said:

Have your client make his broker send you a spreadsheet to import.

Don't do this.  The 8949 has code m for this situation.  As many have stated above, have the lawyer back up his claim with a code section or reg.  He's trying to make you look bad to the partners, make him the one that looks bad. 

[Abby Normal]

2 hours ago, Slippery Pencil said:

Don't do this.  The 8949 has code m for this situation.  As many have stated above, have the lawyer back up his claim with a code section or reg.  He's trying to make you look bad to the partners, make him the one that looks bad. 

K1 capital gains go straight to the Sch D or 4797. No 8949 involved.

[Lion EA]

My clients have a LOT of wash sales, so I love importing spreadsheets.

[Sara EA]

Maybe I've gotten fed up with 100-page brokerage statements, but I've been entering just the totals for each type of gain (short, basis reported, total proceeds, basis, wash sale total; then onto short, basis not reported etc.).  If there are only a few entries I do the trades individually, but the totals end up with the same bottom line and that's really all IRS cares about.  Remember when we had to send the brokerage statements with the 8453?.  We all knew they just went into a dumpster in Austin and if the IRS ever audited any of those returns they'd ask for the statements anyway.

[Abby Normal]

13 hours ago, Sara EA said:

knew they just went into a dumpster

I always thought, incinerator.

[Abby Normal]

14 hours ago, Lion EA said:

My clients have a LOT of wash sales, so I love importing spreadsheets.

That still takes longer than just entering the totals. Plus it makes the the file size larger and the return longer.