2013 Schedule D Forms and Form 8949 Contain Sales/Exchange Reporting Changes

Final versions of the 2013 Forms 1040 Schedule D, 1120 Schedule D and 8949 have been released by the IRS. There have been a few changes to the aforementioned forms regarding how sales and exchanges of capital assets are reported. Form 8949 is used to report sales and other dispositions of capital assets. Unlike schedule D, Form 8949 lists every sale/disposition and separates the totals based on how they were reported to the taxpayer. The totals on Form 8949 are then brought forward to Schedule D. In 2013 both individuals and businesses can look for the following changes to these forms:

Certain Transactions can be omitted from Form 8949

In previous years, Form 8949 has required that every sale/disposition be reported separately, notwithstanding the following exceptions:

1. Taxpayers can attach a separate statement with the transaction detail in a format prescribed by form 8949.
2. Corporations, exempt organizations and partnerships with a large number of transactions were allowed to omit the detail and indicate “Available upon request.”
3. The third exception has been added for the 2013 tax year. Taxpayers may aggregate and report qualifying transactions directly on line 1a (Short-Term Transactions) or line 8a (Long-Term Transactions) of Schedule D. In order to be deemed a qualifying transaction, the following criteria must be met:
   1. The taxpayer must receive a Form 1099-B (or substitute statement) that shows basis was reported to the IRS and does not show a nondeductible wash sale loss in box 5.
   2. There may also be no adjustments made to the basis or type of gain or loss (short-term or long-term) reported on Form 1099-B (or substitute statement).

Taxpayers who qualify to use this new exception and who also qualify for Exception 1 or Exception 2 can use both (i.e., Exception 3 plus either Exception 1 or Exception 2).

Change in Reporting by Electing Large Partnerships

Prior years required both corporations and electing large partnerships to report their share of gains and losses from pass-through entities on Form 8949. In 2013, electing large partnerships will report their share of gain or loss on Schedule D.

Estates and Trusts Must Use Form 8949

Filing Form 8949 for estates and trusts has not been a requirement until 2013. Estates and trusts will now be required to report capital gain transactions on Form 8949. In previous years, all capital transactions at the estate and trust level were reported on Form 1041 Schedule D.

The 2013 changes to Forms 1040 Schedule D, 1120 Schedule D and 8949 allows taxpayers a simplified method for reconciling capital gain transactions.

Should you have any questions related to the changes to Forms 1040 Schedule D, 1120 Schedule D and 8949, please contact your Marcum Tax Professional.