Schedule D - Assigning Basis with multiple entries

W

WinstonTJ

I'm getting audited for 2008 and need to file an ammended Schedule D.

The examiner wants me to tie back to the trades listed on my 1099 from my broker - but I was trading a little longer term and essentially trading around a core position so there aren't clean buy/sell lots.

For example, scale into a position over a few weeks... sell a few hundred shares at highs and add a few hundred shares on the dips.

I have no idea how to assign a basis for the positions. Can I just attach a spreadsheet? Unfortunatley my broker does not have an "export to excel" function prior to year 2009... so I'm SOL and stuck manually doing this.

Thx for any help!
 
I wish I could help bro. Doing your taxes is way harder than trading. I'm sure some good advice will show up here. Good luck!
 
Rule One -- never deal with these clowns personally. Get an accountant that knows how to stand up to unreasonable requsts and refuse. It really does pay to put the ball back in their court by simply having a professional -- NOT YOU, NEVER YOU! -- tell them no.
 
My understanding is that if you didn't specify then you have to assume FIFO (first in first out)... given that you should be able to figure out the basis for each sale
 
Quote from GTS:

My understanding is that if you didn't specify then you have to assume FIFO (first in first out)... given that you should be able to figure out the basis for each sale
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Thx - that's what I was doing but wanted to make sure that was the correct way to account.
 
I'm surprised you are getting audited for this. If your sch D's final number matches the broker's 1099-B then you are good to go. The request for the basis for all your positions is absurd. Just try your best and make sure your final number matches the 1099-B

Also, I'm assuming you have received a "proposed assessment," or what's called a 30 day letter because you have 30 days to respond to it. If you need more time you can request another 30 days. You have to request it in writing. The IRS is good about granting these extensions.

If you get past the 30 day letter and the IRS isn't happy you'll get an "assessment" that isn't proposed. It's an actual bill from the IRS. You have 90 days to file an petition with the tax court to appeal the ruling. You'll be kicked to the appeals office before you go to court. 95% of appeals are settled in the appeals level of the audit.

Quote from WinstonTJ:

I'm getting audited for 2008 and need to file an ammended Schedule D.

The examiner wants me to tie back to the trades listed on my 1099 from my broker - but I was trading a little longer term and essentially trading around a core position so there aren't clean buy/sell lots.

For example, scale into a position over a few weeks... sell a few hundred shares at highs and add a few hundred shares on the dips.

I have no idea how to assign a basis for the positions. Can I just attach a spreadsheet? Unfortunatley my broker does not have an "export to excel" function prior to year 2009... so I'm SOL and stuck manually doing this.

Thx for any help!
More...
 
it was multiple brokers.

I've got about 6 months done - FIFO, assigning cost basis to the positions. they are being very reasonable and this looks like it'll be resolved quickly - they are even helping me out considering after this audit the IRS will actually owe me money back.
 
Did you eventually exit all of your trading positions during the year? Wear all gains/losses short term? If so, then doing the Schedule D on a micro (i.e. per trade) level may be technically correct but won't result in any different tax bill then if you did the Schedule D at a high level, such as per security traded or even all securities traded bundled together.

You might be able to make an argument along these lines.
 
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