Capital Gains & Losses
The most frequently asked tax questions related to Capital Gains & Losses
What is a Wash Sale ?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
A wash sale occurs if you sell stock or securities at a loss, and within 30 days before or after that sale, you buy or acquire (in a fully taxable trade or enter into a contract to acquire substantially) identical stock or securities. The deduction for the wash sale loss will not be allowed, and the basis of the stock will be increased by the amount of the previously disallowed loss.
Is my non-business bad debt limited?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
Possibly yes. A non-business bad debt is reportable as a short term capital loss transaction and should be entered on IRS Schedule D.
You would need to attach a supporting schedule describing the loan, relationship to the debtor, how you tried to collect it and how you determined it was worthless.
You can use it to offset capital gains, and up to $3,000 of other income.
You would need to attach a supporting schedule describing the loan, relationship to the debtor, how you tried to collect it and how you determined it was worthless.
You can use it to offset capital gains, and up to $3,000 of other income.
Is my business bad debt limited ?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
A business deducts its bad debts when figuring Taxable Income A business bad debt is fully deductible and reportable on IRS Form 1040, Schedule D, Part 1, Short Term.
Worthless stock - 3 year or 7 year carryback
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
If you discover you didn't claim a valueless stock loss on your original tax return in the year it became worthless, you can file a claim for a credit or refund due to the loss.
Just file Form 1040X to Amend your return for that year.
You have up to seven years from the date your original return had to be filed.
Just file Form 1040X to Amend your return for that year.
You have up to seven years from the date your original return had to be filed.
Tract of land sale - divided into lots, How do I determine the gain or loss
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The total purchase price of a tract of land must be allocated to each lot based on the relative value of each lot, so that the eventual gain or loss of each lot in the year of sale may be determined.
Selling expenses on sale of property
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
Selling expenses should be added to the cost amount and subtracted from the gross proceeds sales amount on IRS Schedule D. This will help insure that the gross proceeds figure agrees with the 1099 slip that the IRS will receive.
Late December sale of stock - reportable in the current year or following year?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
Gain on sales of year-end publically traded securities must be reported in the current year even though you will receive payment in the following year.
Sale of inherited property
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
The sale of inherited property is reportable as a sale of a long-term asset reportable on IRS Schedule D.
How does the IRS know about my stock sales ?
Asked Friday, September 29, 2000 by an anonymous userCPA Answer:
You will receive a Form 1099-B or 1099-S which states the gross proceeds from the sale of capital assets. The IRS will also receive a copy of Form 1099-B or 1099-S. Make sure the detail transactions listed on IRS Schedule D in the sales column equal the gross proceeds amount listed on Form 1099-B.