Schedule D Details Required
Without a doubt, the most time consuming tax returns are those where the clients have been doing a lot of stock and option trading. Entering the individual trades into the tax program for Schedule D takes hours and hours. Luckily, Sherry has been able to enter most of those into Lacerte; but even with her much lower billing rate than mine, the clients’ bills are in the several thousand dollar range for their 1040s.
While it hadn’t been officially blessed by our masters at the IRS, some tax preparers were short-cutting the detailed entry process and just entering summary totals into Schedule D with backup detailed stockbroker reports either attached or “available upon request.”
With the 2005 Schedule D, it looks like IRS will no longer accept such summary entries on Schedule D and is insisting on each individual trade being entered. Last night, I downloaded and listened to a very informative podcast from CPA Ed Zollars, where he goes into great detail on this not new, but much more explicit requirement by IRS. He shares the fears of some tax pros that not including all of the specific trade details could cause IRS to refuse to accept a 1040 as being properly filed.