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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: Susan Saline who wrote (168)	2/26/1998 1:23:00 AM
From: Colin Cody	Respond to of 1383

Susan, Back in the 80s we USED TO put the commissions from BOTH SIDES of the trade in the COST AMOUNT. . The rules have changed. . SO DON'T DO IT THE OLD WAY!!!! . Report the STOCK Sales per the 1099B which is the Gross proceeds LESS the sell-side commission. Then use the TICKET PRICE for your purchase, which is the Gross amount for the stock PLUS the buy-side commission. . I ALSO treat most OFF-1099B transactions (like CBOE Options) this way too (to be consistant). . It was really DUMB for Congress/IRS to require it the old way... It happened when they invented the form 1099B. I am glad we can do it the sensible way now. . OK I got curious. SO I LOOKED IT UP. It's official - The IRS says to follow your BROKER'S 1099B for Schedule D reporting purposes. . Then I went WAY BACK to see where the law changed. It is a MESS! In 1981 and 1982, for example it was "Gross Selling Price less Commissions" Then in 1993 the form and the instructions were changed to GROSS "per your broker's 1099B." Then in 1994 the form still said GROSS, but the instructions said to "reconcile to the 1099B" This stayed this way until 1989. Then in 1990 they FINALLY fixed the heading on the form from "Gross Sales Price" to "Sales Price" . Now this does not change your Profit or Loss. We are ONLY talking about how to put it on the form. . Colin