Perspectives

Update on the IRS Form 8949

What you need to know

According to the IRS, taxpayers may enter summary totals instead of reporting the details of each transaction on a separate row of Part I or Part II or on attached statements if they meet certain requirements.

As a follow-up to the recent alert issued on Form 8949: Sales and other dispositions of capital assets on March 1, 2013, the IRS released updated instructions on Form 8949 on April 11, 2013. According to the IRS, taxpayers may enter summary totals instead of reporting the details of each transaction on a separate row of Part I or Part II or on attached statements if they meet the below requirements:

1. Taxpayers report more than five transactions for that Part, and

2. Taxpayers file Form 1120S, 1065, or 1065–B or are a taxpayer exempt from receiving Form 1099–B, such as a corporation or exempt organization, under regulations section 1.6045–1(c)(3)(i)(B).

If this exception applies, the taxpayer may enter the summary totals on line 1 or line 3 with the correct box checked. Taxpayers should enter "available upon request" in column (a), leave columns (b) and (c) blank and enter "M" in column (f). If other codes also apply, enter all of them in column (f). Taxpayers should not use a separate row for the totals from each broker, instead, they may enter the summary totals from all brokers on a single row of Part I or Part II with the appropriate box checked.

The new reporting requirements may take a substantial amount of effort for taxpayers not qualifying for the exceptions to accurately complete and will likely require close coordination between fund managers and their tax advisors.

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