1099B Equals Messy Tax Season Ahead

Our CPA's at our Miami Accounting Service foresees some sort of messy tax season with new cost-basis reporting requirements in effect for the 2011 tax year. Our Miami Accounting Service is warning investment CPA's to brace for a hectic tax season and plan a flood of questions from clients who for the first time will receive a revised 1099-B form packed with new transaction information. The new reporting rules stem from the 2008 Emergency Economic Stabilization Act, which laid out some sort of three-phase process for submitting cost-basis information to the Irs. That law, commonly termed the bank bailout bill, also created the $700 billion Troubled Asset Relief Process, or TARP.

The first phase of the rules will require custodians, broker-dealers and others to report the cost basis for any equities purchased on and also after Jan. 1, 2011 relating to the new 1099-B form to the IRS and clients. Which means that in mid-February, millions of investors will receive a new version of a vital tax document which some of our Miami Accounting Service will need to explain in detail.

It's fair to say everyone who receives some sort of 1099 opens it and pays attention to it,€said Gustavo Viera CPA, director of his well-known Miami Accounting Service. This document is looked at, Viera added, noting that our Miami Accounting Service is girding for a very messy tax season.

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

Under this legislation, the default way for brokers to calculate expense basis is first-in, first-out. Clients or their Palmetto Bay Accounting Service can designate an alternate method (last-in, first-out, lowest price to highest, or anything else.) either as some sort of default or for certain lots, but once a trade settles, the method cannot be changed. That method lock-in will likewise have implications for precisely how advisors engineer tax-sensitive investment strategies.

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

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

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

Viera is recommending that will Miami Accounting Services develop a communications and outreach strategy early, not only in their own dealings with clients, but also with CPAs, as well being a training program for the staffers who'll be fielding the phones.

CPA's who provide their own clients with realized gain/loss information should also take the very important step of synchronizing together with reconciling their calculations with their brokers to make sure that clients receive consistent information.

Miami Accounting Service