How Can I Enter Information on Form 8949 - Sales and Dispositions of Capital Assets, in the ProWeb?
The following information is reported on Form 8949:
- A capital asset's sale or exchange that has not been reported anywhere else in the tax return.
- Benefit from an unintended conversion of a nonbusiness capital asset. Provided it does not result from casualty or theft.
- Bad debt from a nonbusiness
- Worthlessness of a security
- The Choice to Forfeit capital benefit that is invested in a Qualified Opportunity Fund (QOF).
- Disposition of interest acquired in a QOF.
Information entered in the Form 8949 menu in Taxx Savage ProWeb must be the very information that is displayed on the form or the sales price statement. Separate menu lines are provided for making adjustments if there is need for them. It is to Schedule D that the summary of the reported transactions on Form 8949 flow.
A 1099-B report of a futures contract that is regulated, a contract of a foreign currency, or a contract resulting from a section 1256 option only is to bear information in Boxes 1a, 8-11, and possibly 4. This information is to be directly entered on Form 6781, Gains and Losses From Section 1256 Contracts and Straddles. For more information on Form 6781, click here.
To complete Form 8949 as well as Schedule D:
- Go to the Federal Section of the Tax Return (Form 1040)
- Proceed to the Income Section
- Select Capital Gains and Losses
- Then go to the Capital Gains and Loss Items - For a MFJ return, indicate whether it is for both the taxpayer and their spouse or if it is for either of them
- Description of Property - apply the same description provided on Form 1099-B
- For stock, Show the ticker symbol as well as the number of shares. For instance, 100 SHARES ABC
- For virtual currency, provide the name and amount too.
- Enter RFC for a regulated futures contract
- Enter SECTION 1256 OPTION if it is a Section 1256 option.
- For a QOF, only enter the EIN of the QOF
- Date Acquired - Enter the Date in Box 1b whenever reported on Form 1099-B. If the securities were either not recovered (that is, Box 5 is checked) or they were bought on different dates, then the date may miss. The taxpayer must, in these situations, provide more information. Select the Alternate Option check box if need be and select one of the following options:
- Various - Short-Term - Securities bought on different dates but all within a year of the date of sale.
- Various - Long-Term - Securities bought on different dates but all exceeding a year before the date of sale.
- Inherited - Long-Term - almost all the inherited assets would apply this for date acquired
- Date Sold - use the date displayed in Box 1c if reported on Form 1099-B
The “Check here if a short sale” box is to be marked when Form 1099-B shows the proceeds of a short sale before 2011.
Select the Alternate Option if the need arises and pick one of the options below:
- Bankrupt - Short-Term
- Bankrupt - Long-Term - For instance, Bad debt of a nonbusiness because of bankruptcy
- Worthless - Short-Term
- Worthless - Long-Term - A security without value is worthless. However, its security abandoned by the taxpayer may also be included.
- Sales Price - Enter the amount in Box 1d if reported on Form 1099-B.
- Alternate Option - Click on this option and select either Expired or Worthless in the event that a security that has been sold is either worthless or expired.
- Select cost basis type - there are three options:
- Box 12 Cost Basis Reported to the IRS - Select this in the event that Box 12 (post 2018) or Box 3 (2018 and before) are marked.
- Box 12 Cost Basis NOT Reported to the IRS - Select this in the event that Box 12 (post 2018) or Box 3 (2018 and before) are not marked.
- Form 1099-B Not Received - this is selected in the event that the transaction was never reported of Form 1099-B
- Is the transaction a Short Term Section 1061 Partnership Interest? - To recharacterize the capital gain received from a transaction on section 1061 from being long-term to being short-term due to the inability to meet the 3-year holding rule, check this box. For more information, check out the IRS Publication 541 here.
- Cost - The date in Box 1e is to be used if reported on Form 1099-B
Select the Alternate Option and pick Expired from the resulting menu, in the event that the security sold was found to have expired.
- Adjustments - In the event that an adjustment code of “W” is displayed on the brokerage statement, or an adjustment code is displayed on Form 1099-B, or an adjustment is required, then, enter the amount and choose the required code.
For instance, select W for a Wash Sale that has an adjustment code of “W” and enter the amount of nondeductible loss in the fields set for Adjustments. The amount has to be a positive number.
For explanation of all the adjustment codes, click here to see the IRS instructions for Form 8949.
- Collectible Exchange - The box for “Is this a Collectible Exchange?” is checked whenever the transaction is a gain that is long term or a deductible loss from the sale that is long-term or an exchange of a capital asset that is collectible. This will push the transaction into the 28% Rate Gain Worksheet.
Once you are done, click Save & Enter Another to enter another capital gain or loss transaction. If you haven’t another transaction to enter, click Continue.
Caveats:
- There may be many Form 8949 in the tax return since each “Form 1099-B type” is to be reported on its own.
- Investments that are QOF should all be listed separately by investment. There is only one exception to this; eligible capital gains investments that are of the same character, date and QOF can be grouped together in a single entry.
Note: This is not tax advice, rather, it is a guide for entering transactions on Form 8949 in the Taxx Savage ProWeb.
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