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Schedule D
Tips
Completing the Schedule D is increasingly more difficult each year. Tax laws keep
changing, companies are re-organizing their equity structure more
frequently, and most brokers still do not provide their customers adequate
information for completing their Schedule D. Investors receive form 1099-B each year listing all
sell transactions and proceeds. Investors are then responsible for
matching appropriate purchases against each sell, using original cost
basis figures to calculate gains and losses, and to calculate holding period for
each lot to properly characterize gains and losses. Sells can be applied across
multiple lots, which could result in both short and long term gains and
losses. Before an investor can begin gain/loss calculations,
they must first scan their trading history to see if any trades resulted
in a wash sales transaction. If so, they must make appropriate cost basis
adjustments and defer some of their losses. Investors also need to modify their holdings for any
corporate actions. A
Corporate Action is essentially any material change to a security,
including name changes, stock splits, spin-offs, and mergers, to name just
a few. In many cases, a corporate action will result in a new position or
a change to the cost basis of a security. Not surprisingly, it is up to
the investor to make all necessary cost basis adjustments for each
security. Here are tips to help you successfully complete your Schedule D. Holding periods and gain/loss characterizations
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