tax problems

If you make a trade today (12/31/2001),
do you report it on your 2001 or 2002 tax return?
I read somewhere on this message board that
you would record it in the year it settles.
But I still think you should report it on 2001.

Is there anyone that could point me to a definite
source for the answer to this question? Thanks!
 
J. As a cash basis taxpayer you would record the transaction on the day you take what is called Constructive Receipt of the funds. Meaning if you sell something and your broker posts the cash to your account today, and you had the right to withdrawal it, you would book the sale this year. If on the other hand, the cash is not posted to your account, you could argue that it would not have to be taken until next year.

Double check my math with Jk Lassers tax guide or another and look under constructive receipt.

Regards,
 
I did some checking on the loss being trapped. According to the docs I have from my accountant, there is something called a "Section 481 de minimis rule".

It states:

"A taxpayer may elect to use a 1 year adjustment period if the entire section 481 adjustment is less than $25,000 (either positive or negative); a taxpayer makes this election by completing the appropriate line on Form 3115"

A section 481 adjustment is essentially a one-time adjustment due to a change in the accounting method.

It seems like this would allow recouping the loss?

One bad year and it takes you forever to get the damn money back from the man.
 
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