Ask Leyla

Why was Form 8949, Sales and Other Dispositions of Capital Assets, added?

Form 8949 has been added because of the new requirement that the basis of stock sold must be reported on Form 1099-B for stock purchased after December 31, 2010.

I heard that there's a new Form 1099-K. What is the purpose of this form?

Starting on January 1, 2011, online checkout services are required to maintain a record of the number of transactions processed through your individual account as well as the dollar amount assigned to each of these payments. When your transaction number crosses 200 and has an assigned dollar value of $20,000 or more, the checkout service must send you a 1099-K at the beginning of 2012 as well as transfer the same information to the IRS, thereby reporting your income through their service.

Will there be changes to business forms in 2011?

Yes. You will have to report sales figures separately, on two separate lines: one for merchant cards and third party payments (generally credit cards); and the other for cash and check payments . This requirement will apply to sole proprietorships (Schedule C) or rental properties (Schedule E) or other business returns (corps, partnerships, etc.). In addition, taxpayers who file Schedule C, have rental property on Schedule E and/or file Schedule F will be required to answer the following questions concerning their information return filing requirements:

• Did you make payments in 2011 that would require you to file Form(s) 1099?
• If "Yes", did you or will you file all required Forms 1099?

I heard that the IRS has made significant changes in reporting capital gains and losses for 2011. Is that true?

Yes. Starting in 2011, you will have to use two forms to report capital gains and losses, Schedule D and Form 8949, Sales and Other Dispositions of Capital Assets. Form 8949 is used to report all sales of capital assets that are required to be reported on Schedule D. The following new fields have been added for reporting capital asset sales on Form 8949:

• Transaction type checkbox — This is to classify whether or not basis is reported on Form 1099-B or a Form 1099-B was not received. The Schedule D has been changed to report the total short-term and long-term gain or loss from the three transaction types that are reported on Form 8949.
• Code field (column b) — This will be used to identify the type of capital transaction it is if an adjustment is required in the new adjustment field. An example would be if a basis is reported on 1099-B for a stock sale and the taxpayer disagrees with that basis. The basis reported on Form 1099-B would be reported on Form 1099-B column f and an adjustment would be shown in column g to reflect the actual basis the taxpayer has in their records.
• Adjustment field (column g) — This is for reporting the difference in basis for stock sales and other transactions such as the exclusion of gain on sale of main home, wash sales, disallowed/nondeductible loss transactions, etc.

Schedule D is now only used to gather all capital gains and losses reported on the various applicable forms and to calculate the total net capital gain or loss for the year.