1099B Equals Messy Tax Season Ahead

The new 1099-B form will now include particulars on cost basis, holding period of time, whether a lot is covered or not, acquisition date and disallowed losses with a wash sale.

Under your legislation, the default method for brokers to calculate charge basis is first-in, first-out. Clients or their Palmetto Bay Accounting Service can designate another method (last-in, first-out, lowest price to highest, or anything else.) either as a default or for specific lots, but once some sort of trade settles, the method can not be changed. That method lock-in will have implications for how advisors engineer tax-sensitive investments.

The result of the new forms, CPA Viera predicts, will be widespread confusion among investors, who should be expected to turn to their Miami Accounting Services in droves on an explanation.

The CPA is going to be nine times out of 10 the main point of contact, Viera claimed. Even if it's not the CPA's issue, they're about to turn to their CPA first.

At our Miami Accounting Service is likely to send out around tax newsletter in connection with new 1099 forms in January, Viera said the firm is expecting to receive hundreds of message or calls as tax season kicks into high gear There's no question they're the main [tax] changes in my own history at our Miami Accounting Service,€ said Viera, who has been a CPA for a lot more than 25 years.

Viera is recommending which Miami Accounting Services produce a communications and outreach strategy early, not only in their dealings with clients, but also with CPAs, as well as a training program for the staffers who'll be fielding the message or calls.

CPA's who provide their own clients with realized gain/loss information must also take the very significant step of synchronizing and reconciling their calculations with their brokers so that clients receive consistent info.

At the same time, Viera also counsels Miami Accounting Services to look ahead to the next two phases with the law and adjust their own bookkeeping and communications techniques accordingly. For the 2012 tax year, brokers will be asked to report cost-basis data for mutual funds, dividend reinvestment plans and most exchange-traded funds acquired on or after Jan. 1, 2012. The 2012 rules apply just to ETFs that are designated for a regulated investment company, and also RIC.

Other ETFs that are designated as corporations will be in the 2011 rules, while still other classes may very well be exempted entirely, though the Treasury Division has broad authority to help expand the asset classes covered in the statute.

In 2013, the reporting requirements will expand to incorporate fixed income and solutions. The IRS is still in the way of drafting the rules for any third phase, and has yet to issue a notice of proposed rulemaking, the main formal step in the regulatory process. Viera's Miami Accounting Service began its education campaign over the legislation around December 2009, but has recently ended up ramping up its outreach to advisors as the tax season draws more detailed.

We've been since July really I’d say spoon-feeding experts information, Viera said. That month, the firm published a whitepaper over the rules, and has since been engaged in various outreach and education efforts to advertise awareness of the changes and help advisors plan for the coming storm. Miami Accounting