Tax & Accounting Blog

New Schedule D for Cost Basis Reporting

Cost-Basis Reporting, Information Reporting for Wealth Management, Tax Information Reporting, Trust Tax August 2, 2011

There has been much discussion about Form 1099-B reporting of cost basis information for covered securities since the initial IRS draft was released in October 2010. However, not until recently has the impact of the changes to Schedule D been discussed.

In April, the IRS released draft versions for both Schedule D and a new Form 8949 for 2011 Individual Form 1040 filers.

 Form 8949, Sales and Other Dispositions of Capital Assets, will replace Schedule D-1, formerly used to list additional transactions for short-term and long-term capital gains and losses.

Like Schedule D-1, Form 8949 has one page for short-term transactions and another page for long-term transactions, but a separate Form 8949 must be completed for each of three types of dispositions:

  • Form 1099-B with basis reported
  • Form 1099-B with basis not reported
  • Form 1099-B not received

It appears that Form 8949 will always be required when sales exist, whereas Schedule D-1 was only required when there were more sales than lines available on Schedule D. The new Schedule D appears to have become more of a summary page, with totals coming from Form 8949 and other forms.

 When asked if similar changes would apply to Schedule D for business returns, IRS sources responded that Form 8949 would not apply to business returns until Tax Year 2012 at the earliest.