1 schedule d in the real world all audio is streamed through your computer speakers. there will be...

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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

members@nsacct.org

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