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Our news articles are posted on a regular basis to give our clients relevant and timely information about matters pertaining to our financial services. Browse through our current and archived articles to learn more.

Category: Accounting & Tax

Financial & Wealth :: What Is the Capital Gains Tax?

capital_gains_taxCapital gains are the profits realized from the sale of capital assets such as stocks, bonds, and property. The capital gains tax is triggered only when an asset is sold, not while the asset is held by an investor. However, mutual fund investors could be charged capital gains on investments in the fund that are sold by the fund during the year.

There are two types of capital gains: long term and short term; each is subject to different tax rates. Long-term gains are profits on assets held longer than 12 months before they are sold. The American Taxpayer Relief Act of 2012 instituted a 20% long-term capital gains tax rate for taxpayers in the 39.6% income tax bracket and extended both the 0% capital gains tax rate for individuals in the 10% and 15% tax brackets and the 15% capital gains tax rate for all other tax brackets. Short-term gains (on assets held for 12 months or less) are taxed as ordinary income at the seller’s marginal income tax rate.

The taxable amount of each gain is determined by a “cost basis” — in other words, the original purchase price adjusted for additional improvements or investments, taxes paid on dividends, certain fees, and any depreciation of the assets. In addition, any capital losses incurred in the current tax year or previous years can be used to offset taxes on current-year capital gains. Losses of up to $3,000 a year may be claimed as a tax deduction.

If you have been purchasing shares in a mutual fund over several years and want to sell some holdings, instruct your financial professional to sell shares that you purchased for the highest amount of money, because this will reduce your capital gains. Also, be sure to specify which shares you are selling so that you can take advantage of the lower rate on long-term gains. The IRS may assume that you are selling shares you have held for a shorter time and tax you using short-term rates.

Capital gains distributions for the prior year are reported to you by January 31, and any taxes that must be paid on gains are due on the date of your tax return.

Higher-income taxpayers should be aware that they may be subject to an additional 3.8% Medicare unearned income tax on net investment income (unearned income includes capital gains) if their adjusted gross income exceeds $200,000 (single filers) or $250,000 (married joint filers). This is an outcome of the Patient Protection and Affordable Care Act.


The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

This material was written and prepared by Emerald.
© 2014 Emerald Connect, LLC All rights reserved.

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Accounting & Tax :: IRS Reiterates Warning of Pervasive Telephone Scam

phonepadlThe Internal Revenue Service recently issued another strong warning for consumers to guard against sophisticated and aggressive phone scams targeting taxpayers, including recent immigrants, as reported incidents of this crime continue to rise nationwide. These scams won’t likely end with the filing season so the IRS urges everyone to remain on guard.

The IRS will always send taxpayers a written notification of any tax due via the U.S. mail. The IRS never asks for credit card, debit card or prepaid card information over the telephone. For more information or to report a scam, go to and type “scam” in the search box.

People have reported a particularly aggressive phone scam in the last several months. Immigrants are frequently targeted. Potential victims are threatened with deportation, arrest, having their utilities shut off, or having their driver’s licenses revoked. Callers are frequently insulting or hostile – apparently to scare their potential victims.

Potential victims may be told they are entitled to big refunds, or that they owe money that must be paid immediately to the IRS. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy.

Other characteristics of this scam include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
  • If you get a phone call from someone claiming to be from the IRS, here’s what you should do:
  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue.
  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at Please add “IRS Telephone Scam” to the comments of your complaint.

Taxpayers should be aware that there are
other unrelated scams
(such as a lottery sweepstakes)
and solicitations (such as debt relief)

that fraudulently claim to be from the IRS.

The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to

More information on how to report phishing scams involving the IRS is available on the genuine IRS website,

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Accounting & Tax :: The Supreme Court Rules that Severance Payments can be Subject to FICA

In an 8-0 decision, the U.S. Supreme Court, on March 25, ruled that retailer, Quality Stores Inc., a large specialty agricultural retailer, was not entitled to a refund of FICA paid on severance payments the company paid to its employees due to layoffs.

Quality Stores, which had over 300 stores, closed all stores and fired all employees in 2001 and 2002. The company paid the disputed taxes and sought a refund claiming that wages should not include severance paid as a result of bankruptcy. Quality Stores contended that the payments represented supplemental unemployment compensation, not wages.

The case was presented in many lower courts that were divided on the issue. The Supreme Court decision reverses rulings by the 6th U.S. Circuit Court of Appeals and a federal district court, which found the payments were not considered taxable wages. The payments were made to 1,850 former employees let go after the company filed for bankruptcy.

The decision is a victory for the present administration and the Justice Department who estimated that the government could face more than $1 billion in tax refund claims from other employers if the decision was upheld. Therefore, all protective claims that were previously filed will be denied and no refunds will be forthcoming to any similarly situated taxpayers.

Text of the opinion is available at


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Accounting & Tax :: New York State Enacts Broad and Significant Tax Reform in New Budget

On March 31, 2014, Governor Andrew Cuomo signed into law a Budget Bill that contains broad and sweeping tax reform provisions that impact both businesses and individuals. These new laws include changes which will impact tax base, tax rates, apportionment methodology, nexus, tax credits and estate tax reform. Except where noted, the changes below are effective for taxable years beginning on or after January 1, 2015.

Notable Changes Adopted in the Budget

Property Tax Relief for Homeowners
For years beginning on or after January 1, 2014, the Budget includes a two-year property tax freeze to homeowners. This will be accomplished through payment of a rebate by New York State. In year one of the freeze, New York will provide tax rebates to homeowners who live in a jurisdiction that does not impose a property tax increase greater than 2%. In year two, rebates will be provided to homeowners who live in a jurisdiction that does not impose a property tax increase greater than 2% and agree to implement a shared services or administrative consolidation plan. This rebate does not apply to New York City homeowners.

Corporation Tax Rates
For tax years beginning on or after January 1, 2016, the Budget provides for a tax rate reduction from the current 7.1 percent to 6.5 percent of Entire Net Income (ENI) for corporate taxpayers. Certain New York manufacturing taxpayers will benefit from a zero tax rate effective for tax years beginning January 1, 2014 (more detail below). The Budget also contains:

  • A reduction of the tax rate applied to the capital base computation, such that the current rate of 0.15 percent will be phased out for tax years beginning on or after January 1, 2021.
  • Changes to fixed dollar minimum tax that could increase the tax for taxpayers who pay under this methodology.
  • Additional tax brackets added to the fixed dollar minimum computation. Current law has a top bracket for the minimum tax which includes taxpayers with New York receipts over $25 million and a corresponding tax of $4,500. The new law has a top bracket of New York receipts of over $1 billion and a corresponding tax of $200,000.
  • Elimination of the tax on minimum taxable income and the separate tax on subsidiary capital.
  • An increase in the Metropolitan Business Surcharge from the 17 percent to 25.6 percent for tax years beginning on or after January 1, 2015, but before January 1, 2016. (The rates for future years will be determined at a later date.)

Rate Reduction for New York Manufacturers
Effective for tax years beginning on or after January 1, 2014, the Budget provides for a zero tax rate to be imposed on “qualified New York manufacturers”. A qualified New York manufacturer is a manufacturer owning property in New York that would be eligible for the investment tax credit and meets certain dollar value thresholds. It should be noted that the zero tax rate is applicable only to New York C corporations. The current legislation does not address the availability of a zero tax rate to flow- through entities such as New York S Corporations or entities taxed as partnerships. To qualify for the corporate income tax elimination available to manufacturers, non C corporation companies would have to restructure. This provision is deemed to be a major boon to businesses, especially in the upstate regions.

Apportionment Method
New York will join the trend of other states who have adopted a single sales factor apportionment methodology by adopting a market based sourcing regime for purposes of determining the revenue allocated to New York State. New rules are provided to address receipts from services, intangible property, sales of digital property and transactions in various types of securities. These rules will not impact businesses who sell tangible personal property.

Combined Reporting
New York’s current law provides for combined reporting based on the presence of substantial intercompany transactions. The new law replaces these rules with combined reporting now based upon unitary provisions. Combined reporting will now be required by any taxpayer:

  • That owns or controls, directly or indirectly, more than 50% of the capital stock of one or more corporations or
  • More than 50% of the capital stock of which is owned or controlled either directly or indirectly by one or more other corporations or
  • More than 50% of the capital stock of which, and the capital stock of one or more other corporations, is owned or controlled , directly or indirectly, by the same interests and
  • That is engaged in a unitary business with those corporations.

Corporations may elect to be combined with non-unitary companies provided that ownership thresholds are met. This election is irrevocable and is binding for the current year plus six additional years. The election will be automatically renewed for the next seven year period unless revoked.

Net Operating Losses (NOL)
The new law changes the NOL provisions from a pre-apportionment to post-apportionment computation. It also ends the requirement that the New York NOL usage will be limited to the same amount of NOL used for federal tax purposes. This will serve to “decouple” the New York NOL from the federal NOL. New rules also allow taxpayers to reduce future taxable income using NOL’s generated under the old (pre-apportionment basis) using a computation of a modified amount. A three year carryback period is permitted for NOL’s incurred in post-reform taxable years (but no NOL can be carried back to a taxable year beginning before January 1, 2015.)

Tax Credits
Several new and expanded tax credits are contained in the budget including:

  • Effective January 1, 2014, a new property tax credit equal to 20% of the real property taxes paid during the taxable year by qualified New York manufacturers. The budget will reduce manufacturers’ property taxes-even if they are paid through a lease. Manufacturers already getting tax breaks through other state programs, such as the Empire Zone or IDA, cannot claim the additional property tax reductions.
  • Extension of the Empire State Commercial Production Credit through December 31, 2017,
  • A refundable credit for telecommunications excise taxes paid by Start-Up New York companies,
  • A new tax credit for musical and theatrical production companies equal to 25% of qualified production and transportation expenses, capped at $4 million per year,
  • Extension of the Lower Manhattan Sales and Use Tax Exemption through September 1, 2017,
  • Expands the investment tax credit to include the purchase of qualified depreciable property used in New York by businesses, in addition to manufacturers, including industrial waste facilities, research and development activities, broker-dealers in connection with the purchase or sale of stocks, bonds and securities, businesses providing investment advisory services for a regulated investment company, or loan origination services in connection with the purchase or sale of securities and businesses engaged in qualified film production activities.

Economic Nexus Standards
The Budget adopts an economic nexus standard such that a corporation deriving receipts of $1 million or more in a taxable year will now be subject to New York State tax. A corporation will be deemed to be doing business in the state if it has issued credit cards to 1,000 or more customers with mailing addresses within New York State. This provision will have the effect of bringing more out-of-state corporations into the grasp of New York State taxation.

Corporate Partner Nexus
Current law provides that a non-New York corporation is “doing business” and subject to New York taxation if it is a partner in a partnership or a member in a limited liability company or partnership (other than a portfolio investment partnership) and meets one of 10 tests such as holding a greater than 1% LP interest. The new law provides that a corporate partner will now be subject to tax in New York by holding any type of partnership/LLC/LLP interest that is doing business in the state.

Fulfillment Center Exception
Current New York law included an exception to the establishment of nexus if an out-of-state corporation’s only activity in the State was the use of an unrelated fulfillment center in New York to store and ship inventory. The new law repeals this exception.

Merger of Bank Tax and Corporate Tax Regime
One of the Governor’s stated reasons at the beginning of the budget process was to provide tax simplification and relief and improve voluntary compliance. The elimination of the separate bank tax regime is purported to address this simplification. Banks will now be taxed under the corporate tax provisions. Thrift institutions and Qualified Community Banks (“QCB”) will be entitled to one of three special subtraction modifications effective for tax years beginning on or after January 1, 2015:

  • Special subtraction modification #1 – Thrifts and QCB will be allowed a deduction of 32% of entire net income that exceed charge-offs, or
  • Special subtraction modification #2 – Small Thrifts and QCB will be allowed a deduction of 50% of the net interest income related to “Qualifying Loans”. One of the qualifications for Small Thrifts is the average assets of the taxpayer or affiliated group must not exceed $8 billion. Qualifying loans are small business loans or a residential loan the principal amount is $5 million or less, or
  • Special subtraction modification #3 – Small Thrifts and QCB that has maintained a captive REIT on April 1, 2014 will be allowed a deduction of 160% of the dividends paid deduction allowed for federal income tax purposes. A small Thrift or a QCB that maintains a captive REIT will not be allowed to utilize either of the first two modifications.

One of the qualifications of a QCB is that the average assets of the taxpayer or affiliated group must not exceed $8 billion. Each of these subtraction modifications require detailed information that will all be subject to questions under audit. Depending on which subtraction modification used the change to the taxpayers’ effective tax rate could be a permanent benefit or a temporary benefit.

Other change effecting financial institutions includes

  • Apportionment for loan interest income will be customer sourced instead of the greater of the income producing activities.
  • Qualified financial instruments can be allocated to NYS on a fixed percentage method of 8% instead of commercial domicile.

Estate and Gift Tax Reform
The budget includes language which will generally conform New York’s estate tax to the federal estate tax law as of January 1, 2014. The New York estate tax exemption rises to $2,062,500 for decedents dying on or after April 1, 2014 and will increase each year until reaching an exemption of $5,250,000 for those dying on or after April 1, 2017 and before January 1, 2019. The exemption will then be indexed for inflation. The new law also requires an addition to the estate tax base for gifts made by the decedent within 3 years of death if the decedent was a New York resident at the time the gift was made (applies to gifts made on or after April 1, 2014 and before January 1, 2019). The law makes no changes in the current New York estate tax rate.

Concluding Summary
As described above the new budget contains a myriad of changes which will impact many taxpayers – located both within and outside of New York State. As the effective date for many of these provisions is January 1, 2015, taxpayers should evaluate the impact the changes have on their tax filing methodology and overall tax liability.

It should be noted that the enactment date of this bill, March 31, 2014, creates a first quarter 2014 law change. Impact on financial statement disclosures and deferred tax assets or liabilities should be taken into account when evaluating the potential effect to financial statement preparation.

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Notice of Employee Rights to Paid Sick Leave

Under New York City’s Earned Sick Time Act (“Sick Leave Law”), employees of [COMPANY] are entitled to paid sick leave under the following terms and conditions.

Accrual of Paid Sick Leave
Employees accrue sick leave at the rate of one hour for every 30 hours worked, up to a maximum of 40 hours of paid sick leave per calendar year. [COMPANY]’s calendar year begins on [January 1] and ends on [December 31].
Employees who were employed prior to April 1, 2014 began to accrue paid sick leave on April 1, 2014. Employees who began their employment with [COMPANY] after April 1, 2014 begin to accrue paid sick leave on their first day of employment.

Use of Paid Sick Leave
Employees who were employed prior to April 1, 2014 may begin to use paid sick leave on July 30, 2014. Employees who began their employment with [COMPANY] after April 1, 2014 may not begin using paid sick leave until after they have completed 90 days of employment. No more than 40 hours of paid sick leave may be used in a calendar year. Paid sick leave must be used in increments of at least four hours. Once accrued, employees may use paid sick leave if:

  • The employee has a mental or physical illness, injury, or health condition; the employee needs to get a medical diagnosis, care, or treatment for the employee’s mental or physical illness, injury, or condition; or, if the employee needs to get preventive medical care.
  • The employee must care for a family member who needs medical diagnosis, care, or treatment for a mental or physical illness, injury, or health condition, or who needs preventive medical care.
  • [COMPANY] closes due to a public health emergency or the employee needs to care for a child whose school or child care provider closes due to a public health emergency.

For purposes of the Sick Leave Law, the following are considered “family members”: child, grandchild, spouse, domestic partner, parent, grandparent and child or parent of an employee’s spouse or domestic partner and sibling (including a half, adopted, or step sibling).

If the need for the use of paid sick leave is foreseeable, an employee must provide his or her supervisor with seven days advance notice of the intention to use paid sick leave. If the need is unforeseeable, an employee must provide his or her supervisor with notice as soon as practicable (reasonable).

In order to use paid sick leave, an employee must provide written verification that the leave was used for the one of the purposes listed above. If an employee uses paid sick leave for more than three full consecutive work days, the employee must provide [COMPANY] with documentation from a licensed health care provider indicating the need for the amount of paid sick leave used. (Please note that [COMPANY] may request additional documentation in certain circumstances in which other laws are at issue, such as the Americans with Disabilities Act and the Family and Medical Leave Act).

Unused Paid Sick Leave
Unused paid sick leave is carried over to the following calendar year and is not paid out at termination.

Department of Consumer Affairs (“DCA”)
Employees who believe their Sick Leave Law rights have been violated may file a complaint with the DCA.

No Retaliation
[COMPANY] will not retaliate against employees for requesting or using paid sick leave, filing a complaint with the DCA in good faith, communicating with anyone about a violation of the Sick Leave Law, participating in an administrative or judicial action regarding an alleged violation of the Sick Leave Law or informing anyone about their rights under the Sick Leave Law.

Union Employees
Employees who are covered by a collective bargaining agreement (“CBA”) in effect on April 1, 2014 are not entitled to paid sick leave under the Sick Leave Law until the CBA expires and only if a subsequent CBA does not (1) waive employees’ rights under the Sick Leave Law and (2) provide for comparable benefits.

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Accounting & Tax :: Get Tax Transcripts FAST


In mid-January 2014, the IRS introduced the ability for taxpayers to instantly view and print tax transcripts. Prior to the introduction of this new online service, taxpayers were able to request either returns or transcripts, which would take approximately 5-10 days to be delivered.


Tax return and tax account transcripts are available
for the current year plus the previous 3 processed years.
Wage and income transcripts are available for
the past 10 processing years.

The new online feature will give taxpayers instant access to:

Tax Return Transcripts — Reflecting most items from the tax return as it was originally filed. (It does not reflect any changes made after it was originally filed.)
Tax Account Transcripts — Showing any adjustments made after the return was filed, including basic data, such as marital status, type of return, gross and taxable income.
Record of Account Transcripts — Combines the information from a tax return transcript and a tax account transcript.
Wage and Income Transcripts — Provides data from W-2s, 1099s, 1098s, etc.
Verification of Non-filing Letter — Proof from the IRS that the taxpayer did not file a return this year.

To access this feature, follow this link:

After creating an account and signing in, the taxpayer will answer security questions and have immediate access to a page listing the years available for each transcript. Tax return and tax account transcripts are available for the current year plus the previous 3 processed years. Wage and income transcripts are available for the past 10 processing years.
This is a quick and easy way for taxpayers to get immediate access to their past tax return information.

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Accounting & Tax :: Estate Tax Savings Opportunity for New York Residents

Governor Cuomo introduced his Executive Budget for 2014-2015 on January 21, 2014 to the New York State Legislature. The Bill provided a number of changes impacting Estates of New York Residents.


“…clients who have significant estates and,
who are considering making gifts of their
remaining federal estate tax exemption amount
(the maximum federal exemption is
currently $5.34 million per person)
may wish to complete such gifts
during the small window of opportunity
which may close on April 1, 2014.

New York Estate Tax Exemption Increased and Estate Tax Rates Decreased  

The Bill includes a proposal to:
1. Increase the New York State estate tax exemption amount (presently $1 million) to $5.25 million over the next four years, and indexing future levels to inflation, and

2. Lower the top New York estate rate from 16% to 10% by 2017.
Please be advised that New York does not have portability provisions, which for federal estate tax purposes would permit a surviving spouse to inherit the decedent spouse’s unused estate tax exclusion amount (DSUE).

Window of Opportunity May Be Closing
Starting in 2011, when the federal estate and gift tax exemption began increasing from $5 million dollars to $5.34 million dollars in 2014, many New York residents began making large lifetime gifts which resulted in the reduction of their New York State estate tax. This reduction occurs because New York State does not have a gift tax and because New York State does not currently add back gifts to the New York taxable estate at death. The Bill proposes to include gifts made after March 31, 2014 in a New York resident decedent’s estate for New York estate tax purposes, if the decedent was a New York resident at the time of the gift.

Therefore, clients who have significant estates and, who are considering making gifts of their remaining federal estate tax exemption amount (the maximum federal exemption is currently $5.34 million per person) may wish to complete such gifts during the small window of opportunity which may close on April 1, 2014.

The Bill is complex and the potential estate tax savings from using lifetime gifts described above must be balanced against several issues, including the potential loss of a “step-up” in basis at death if making a gift of an appreciated asset. However, if passed, it is clear that the Bill will result in potential tax saving benefits to New York residents making lifetime gifts prior to April 1, 2014.

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Accounting & Tax :: NYS Tax Refund: E-mail Notification Sign- Up

New York taxpayers can sign up to receive an email when their income tax refunds are issued instead of calling the department or checking your refund status online. 

Sign up for email today by logging into your Online Services account and selecting “Manage email” from “Account Preferences” at the top of the page.

If you have already signed up for email, but only for Bills and Related Notices, you will need to sign up for Other Notifications to get email telling you when to expect your refund.

If you have questions, please visit:

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Accounting & Tax :: New York’s Metropolitan Commuter Transportation Mobility Tax Upheld

On January 14, 2014, the New York Court of Appeals, the state’s highest court, declined to hear a challenge to the Metropolitan Commuter Mobility Tax, the payroll tax levied in counties served by the Metropolitan Transit Authority. The decision permits the continuance of the tax, which was enacted in 2009, and helps fund the region’s mass transportation.


The tax is imposed on certain employers, self-employed individuals and partners in a partnership conducting business within the Metropolitan Commuter Transportation District, including the counties of Duchess, Orange, Putnam, Rockland, Westchester, Nassau, Suffolk and the boroughs of New York City.


Local county executives have fought hard to reverse this tax declaring it an undue burden on local businesses, especially those whose employees never use MTA services such as railroads, subways and buses. The MTA states that the fees are necessary to reduce costs. The tax imposes an up to 34-cent tax for every $100 of payroll for large companies with an annual payroll more than $1.25 million and on self-employed individuals and partners.


This tax was first challenged in August 2012 when the New York State Supreme Court found the tax unconstitutional. New York State immediately appealed this decision and in June 2013 the New York Appellate Court reversed the Supreme Court finding the tax to be constitutional. The final appeal to the Court of Appeals and their decision to not hear the case, essentially leaves the tax as a valid tax and good law. All taxpayers and employers must continue to comply with this law as it is in full force and effect.


The State had previously implemented a streamlined appeal process to handle protective refund claims that were anticipated as uncertainty about this tax continued during the appeals process. All of these claims are now null and void.

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Accounting & Tax :: 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:

a. 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.

b. 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.

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