Cap Gain Reporting to IRS

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boater07
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Cap Gain Reporting to IRS

Post by boater07 »

If I use specific id for my cost basis, do I have to itemize a sale of 6 fund transactions?
Or can that be reported as one sale even if differerent holding periods.
Hope this makes sense
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Artsdoctor
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Re: Cap Gain Reporting to IRS

Post by Artsdoctor »

I want to make sure I understand your question correctly. Are you selling 6 different lots of the same security (ETF or mutual fund)? If so, you'll be asked at the time of your order to specify which lots you're going to be selling. You will not need to notify your broker later which lots you've sold since they will be keeping track of that for capital gain/loss purposes. All brokers are obligated to do this for "covered shares." Covered shares are defined as ETFs purchased on or after 1/1/11 and mutual fund shares purchased on or after 1/1/12.

If you're selling shares that are not covered (meaning, they're older than the dates above), your broker may not give you the option of selling the specific lots. In that case, you should notify your broker in writing which lots you sold as soon as possible.

How this will be entered on your tax form may depend on the software you're using. It's usually entered as a single sale date with the date of share purchases being listed as "various."
Hyperchicken
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Re: Cap Gain Reporting to IRS

Post by Hyperchicken »

If cost basis is reported to IRS (i.e., you're selling covered shares), and if you don't need to adjust cost basis (e.g., no wash sales), you can put totals on Schedule D directly. There is no need to file form 8949 at all, neither itemizing tax lots, nor reporting the sale as one line.
rkhusky
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Re: Cap Gain Reporting to IRS

Post by rkhusky »

If you sell multiple lots of the same fund at the same time, you can use Various as the date acquired.
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boater07
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Re: Cap Gain Reporting to IRS

Post by boater07 »

Thank you all for a very thorough explanation. I'm clear with minimal paperwork
at tax time. I was not aware I could show "various" for purchase dates. :sharebeer
Hyperchicken
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Re: Cap Gain Reporting to IRS

Post by Hyperchicken »

boater07 wrote: Mon Aug 15, 2022 6:23 pm Thank you all for a very thorough explanation. I'm clear with minimal paperwork
at tax time. I was not aware I could show "various" for purchase dates. :sharebeer
You may not need "various" either. You (likely) don't need form 8949 where "various" would go at all.
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Artsdoctor
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Re: Cap Gain Reporting to IRS

Post by Artsdoctor »

Hyperchicken wrote: Mon Aug 15, 2022 6:28 pm
boater07 wrote: Mon Aug 15, 2022 6:23 pm Thank you all for a very thorough explanation. I'm clear with minimal paperwork
at tax time. I was not aware I could show "various" for purchase dates. :sharebeer
You may not need "various" either. You (likely) don't need form 8949 where "various" would go at all.
Agreed. If your 1099-B doesn't need to be reconciled, you won't need to use Form 8949. The introduction to the IRS instructions is excellent and very clear:

https://www.irs.gov/instructions/i8949
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