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Reporting Stock Transactions Becomes More Complicated
For years, the IRS has required brokerage firms to report
the gross proceeds from the sale of stocks and other
securities on the Form 1099-B. Beginning with 2011
purchase transactions, brokers are required to track the
price paid for the securities and include that
information on the 1099-B when that particular security is
subsequently sold.
This new system of reporting is not a fix-all solution for you or the IRS
because it does not have the cost or basis information for
securities acquired prior to 2011 or for securities acquired
by gift or inheritance. Some brokers also may report on
Form 1099-B the cost information, if known, for stocks
purchased prior to 2011. All taxpayers should verify the
cost basis reported on Form 1099-B.
So that the IRS can use the new data to verify taxpayer
profit or loss transactions attributable to purchases where
the cost information is included on the 1099-B, the year’s
transactions must be separated between those that the
broker IS and IS NOT reporting the cost basis.
Now that the IRS has profit or loss matching capabilities, it is important to
correctly report the transactions as the IRS expects to see
them. Please call us if you have questions relating to
reporting your security sales.
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