2013 Consolidated 1099s Available!

[core]

I would love to see you try to argue this to an IRS agent.

That's the beauty of it:  There's no argument to be had, because them's the rules, in black & white.  Few things in life are more fun than malicious compliance.

[Bohb Daishi]

That's the beauty of it:  There's no argument to be had, because them's the rules, in black & white.  Few things in life are more fun than malicious compliance.

Except that "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total." -http://www.irs.gov/instructions/i1040sd/ch02.html

You don't round at the transaction-level, you round the aggregate. This rule was implemented for administrative convenience; not as a tax dodge.

[core]

Except that "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total." -http://www.irs.gov/instructions/i1040sd/ch02.html

Who said anything about adding two or more amounts to figure the amount to enter on a line?  We aren't talking about any totals in aggregate here.  Form 8949 has individual blanks for single sales. 

Say you bought a note for $23.51 and sold it for $24.49 (after commissions).  The entry would look like this:



There are no intermediate steps here,  so the instruction you quoted does not apply in this case.

This rule was implemented for administrative convenience; not as a tax dodge.

It does not matter why a given rule is implemented, only that it exists.  When loopholes are found they eventually plug them, but until then they get used.  That's part of the game.  Since when was compliance with the spirit of the law mandatory?  You'd have a hard time enforcing that.

[Bohb Daishi]

Say you bought a note for $23.51 and sold it for $24.49 (after commissions).  The entry would look like this:

I know the method would work if you are extremely careful with your calculations and sale prices. It would be more pronounced if you were in a high tax bracket.

But I'm viewing this in practical terms. If you were a convenience store, you couldn't just mark every bit of inventory to give you a $0 taxable gross margin. Nor can you do this if you are a market maker in the stock market - those pennies add up. Logically, I can not see your claim holding in court if you were audited.

[core]

The convenience store isn't affected by any rounding issues because everything's totalled up.  There is no rounding there except for the final steps.  The market maker may be a better example... that's a good one.  But if the bid/ask spread is a nickel, it only takes 20 shares before it's a buck.  (Who runs around trading 20 shares of a low dollar stock?)  So even if the market maker put down each individual trade separately I doubt he'd be getting much of advantage.  In practice I would assume that they'd total up their trades by symbol/exp.month/etc since they are exactly the same security and that would definitely be allowed.  (This means no rounding except the total.)  I wouldn't know, I'm not a market maker.  But I'm just assuming they don't file tens of thousands of pages with their returns.

[SkaXc0re77]

(Who runs around trading 20 shares of a low dollar stock?) 

20 ANGI - Angi's List -up $41.60 (17.10 a sahre)
17 CODI - Down 12.75 (18.13)
15 DDD - Had 30 and sold off some during the crazy gains - still up 154.13 (but its 67 a share so not "low  $"
13 DIS - Up 121.94 (same deal - 78 a share)

and more in that under 20 mark :-P

I have 17 positions, 9 are 20 and under, one is 25, only 2 are over 100

Maybe I'm doing it wrong?

[Bohb Daishi]

(Who runs around trading 20 shares of a low dollar stock?)

Retail investors, as proven by StaXc0re77's post.

Market makers calculate their taxable gain is by using a variation of this ridiculously simple equation: (annual gain/loss) = (ending balance) - (beginning balance) + (money withdrawn) - (money deposited)

[wildbill218]

A quick note, while working on my returns today (I use TurboTax Deluxe), I found this utility:
http://1099bimporter.com/release.htm ($4.99) invaluable for creating import files for 1099-B's into form 8949 YMMV.  Not associated with this company or software in any way.

[ggnoob1337]

A quick note, while working on my returns today (I use TurboTax Deluxe), I found this utility:
http://1099bimporter.com/release.htm ($4.99) invaluable for creating import files for 1099-B's into form 8949 YMMV.  Not associated with this company or software in any way.

Thanks to your post, I did a quick search and found this website: http://www.easytxf.com/

I just converted my CSV to TXF and imported it into TurboTax Premier (software version) just fine. Wow that saves me a lot of time!

[Keltset]

(Who runs around trading 20 shares of a low dollar stock?) 

20 ANGI - Angi's List -up $41.60 (17.10 a sahre)
17 CODI - Down 12.75 (18.13)
15 DDD - Had 30 and sold off some during the crazy gains - still up 154.13 (but its 67 a share so not "low  $"
13 DIS - Up 121.94 (same deal - 78 a share)

and more in that under 20 mark :-P

I have 17 positions, 9 are 20 and under, one is 25, only 2 are over 100

Maybe I'm doing it wrong?

Brutal... Why would you hold such low amounts of a single stock in the price range? What on earth are you paying in/out on those transactions against the cost of the entire order? You are holding positions worth a measly $342, $308, $1005, & 1014? :-/ Even adding that together its a really small position for any single holding imho... You said in another thread you had 15k outside of LC is it all like this broken into a ton of small holdings that should really be consolidated into a few solid holdings (IMHO)?

Either way though the benefit isn't the same in rounding practices as this thread is discussing because your differences equate to values larger than a dollar... (Yes, I understand the principle is the same but substantially different and less meaningful when you are rounding to the nearest dollar on a gain of 100.10 vs 0.10)

[BruiserB]

A quick note, while working on my returns today (I use TurboTax Deluxe), I found this utility:
http://1099bimporter.com/release.htm ($4.99) invaluable for creating import files for 1099-B's into form 8949 YMMV.  Not associated with this company or software in any way.

Thanks to your post, I did a quick search and found this website: http://www.easytxf.com/

I just converted my CSV to TXF and imported it into TurboTax Premier (software version) just fine. Wow that saves me a lot of time!

Where are you guys getting the CSV version of your 1099?  I only see the PDF version Lending Club provides? 

[ggnoob1337]

A quick note, while working on my returns today (I use TurboTax Deluxe), I found this utility:
http://1099bimporter.com/release.htm ($4.99) invaluable for creating import files for 1099-B's into form 8949 YMMV.  Not associated with this company or software in any way.

Thanks to your post, I did a quick search and found this website: http://www.easytxf.com/

I just converted my CSV to TXF and imported it into TurboTax Premier (software version) just fine. Wow that saves me a lot of time!

Where are you guys getting the CSV version of your 1099?  I only see the PDF version Lending Club provides?

I copy/pasted from the PDF into Excel and adjusted any formatting as needed. Then just save as .csv in order to do the conversion from CSV to TXF.

[Joleran]

Question about OID - suppose you buy a note for $1 off of Folio, with $2 in remaining principal.  The note matures, paying you the $2 principal and $1 of interest.

Assuming we take fees out of the equation, is your OID reported on this note $1 or $2?

[yojoakak]

Question about OID - suppose you buy a note for $1 off of Folio, with $2 in remaining principal.  The note matures, paying you the $2 principal and $1 of interest.

Assuming we take fees out of the equation, is your OID reported on this note $1 or $2?

My guess: Neither.

"...
(1) General rule
For purposes of this title, there shall be included in the gross income of the holder of any debt instrument having original issue discount issued after July 1, 1982, an amount equal to the sum of the daily portions of the original issue discount for each day during the taxable year on which such holder held such debt instrument.
...
(3) Determination of daily portions
For purposes of paragraph (1), the daily portion of the original issue discount on any debt instrument shall be determined by allocating to each day in any accrual period its ratable portion of the increase during such accrual period in the adjusted issue price of the debt instrument. For purposes of the preceding sentence, the increase in the adjusted issue price for any accrual period shall be an amount equal to the excess (if any) of—
(A) the product of—
(i) the adjusted issue price of the debt instrument at the beginning of such accrual period, and
(ii) the yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), over
(B) the sum of the amounts payable as interest on such debt instrument during such accrual period.
..."

http://www.law.cornell.edu/uscode/text/26/1272

[BruiserB]

Question about OID - suppose you buy a note for $1 off of Folio, with $2 in remaining principal.  The note matures, paying you the $2 principal and $1 of interest.

Assuming we take fees out of the equation, is your OID reported on this note $1 or $2?

It's all in here......

http://www.irs.gov/pub/irs-pdf/p1212.pdf

Likely you will have $1 of OID reported to you on your 1099, but you are supposed to correct it to $2 and pay tax on a $2 gain.