1099B Equals Messy Tax Season Ahead

This document is seen, Viera added, noting our Miami Accounting Service is usually girding for a very messy tax season.

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

Under that legislation, the default method for brokers to calculate charge basis is first-in, first-out. Clients or their Miami Accounting Service can designate an alternate method (last-in, first-out, cheapest price to highest, etc.) either as a default or for specific lots, but once some sort of trade settles, the method should not be changed. That method lock-in will also have implications for how advisors engineer tax-sensitive investment strategies.

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

The CPA will likely be nine times out of 10 the first point of contact, Viera said. Even if it's not the CPA's issue, they're planning to turn to their CPA first.

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

Viera is recommending that Miami Accounting Services develop a communications and outreach strategy ahead of time, not only in their dealings with clients, but also with CPAs, as well for 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 should also take the very fundamental step of synchronizing and reconciling their calculations with their brokers to make sure that clients receive consistent info.

At the same time period, Viera also counsels Palmetto Bay Accounting Services to look forward to the next two phases in the law and adjust their own bookkeeping and communications strategies accordingly. For the 2012 tax year, brokers will be required to report cost-basis data with regard to 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 as a regulated investment company, or RIC.

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

In 2013, the reporting requirements will expand to provide fixed income and possibilities. The IRS is still in the operation of drafting the rules for any third phase, and offers 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 on the legislation around December this year, but has recently been ramping up its outreach to advisors as being the tax season draws nearer.

CPA