Author Topic: LC Tax Documents available now!  (Read 19132 times)

Zach

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Re: LC Tax Documents available now!
« Reply #15 on: January 31, 2013, 10:02:38 PM »
So, I see box 7 is empty... does that mean LC has not including their servicing fees in the calculation?

Nothing for FolioFn fees either.

LendingClub's service fee for the year, and the charge offs, can be found on the Year End Summary (linked from the Statements page).

Foliofn's fees can be found on their Year-end Summary (linked from the bottom of the My Account page.)


It would have been nice if these had been included on the 1099, but remember: your numbers don't necessarily have to match what's been reported, they just have to make sense and be justifiable if the IRS ever audits you.

(Of course, that begs the question: if the numbers don't match is that more likely to trigger an audit?)

The IRS has automated detection of under reported income from forms such as 1099s that are filed with them. If you under report, you will automatically get a letter from the IRS hat indicates they will assess additional tax and penalties after 18+ months from the filing date.

I would definitely not recommend it.

yojoakak

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Re: LC Tax Documents available now!
« Reply #16 on: January 31, 2013, 10:05:50 PM »

The IRS has automated detection of under reported income from forms such as 1099s that are filed with them. If you under report, you will automatically get a letter from the IRS hat indicates they will assess additional tax and penalties after 18+ months from the filing date.

I would definitely not recommend it.

Deducting fees and losses that LendingClub chose not to report is NOT under-reporting.

Zach

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Re: LC Tax Documents available now!
« Reply #17 on: January 31, 2013, 10:37:15 PM »

The IRS has automated detection of under reported income from forms such as 1099s that are filed with them. If you under report, you will automatically get a letter from the IRS hat indicates they will assess additional tax and penalties after 18+ months from the filing date.

I would definitely not recommend it.

Deducting fees and losses that LendingClub chose not to report is NOT under-reporting.

Correct, but you'll get hassled by the IRS - probably not worth it.

I'm going to consult my tax adviser on the best way to report charge offs and service fees that LC doesn't.

desk8149

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Re: LC Tax Documents available now!
« Reply #18 on: February 01, 2013, 07:57:17 AM »
It seeems that we need to wait for the 1099-B to complete our tax forms.  The 1099-B should have the date acquired, date sold, basis, etc. for all the charged off notes which is required on Schedule D.  Does anyone know of another way to get all this info?  Or is it OK to lump multiple charge offs together as one capital loss without all the individual information?

SarahV

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Re: LC Tax Documents available now!
« Reply #19 on: February 01, 2013, 10:40:30 AM »
Yikes... mine's a measly 5 pages.

So, I see box 7 is empty... does that mean LC has not including their servicing fees in the calculation?
I just checked the year-end statement vs. the 1099 and it looks like the 1099 does factor in the service fees you paid.

AmCap

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Re: LC Tax Documents available now!
« Reply #20 on: February 02, 2013, 10:38:25 AM »
Ok so I just reviewed my Prosper docs, and indeed as other people have pointed out there are errors there too.  In particular they list the character of every sale/exchange/disposition as long-term and capital, even if you didn't hold the note for a year.  This obviously does not conform to the code.

Frankly I think at this point I am personally comfortable just disregarding the 1099 and reporting my OID and gain/loss in conformity with the code and regulations. If you have a tax professional they should be able to do the same, but I warn that taxation of debt instruments is really hard.  I'm not sure if I'd walk into the local HR Block office w/ a bunch of notes I bought and say "please calculate my OID and market discount and tell me what my capital loss is."  They might just look at me funny...

I guess the real issue for LC and Prosper is how to do better for the 95% of investors who a) don't understand tax at all (or a little bit but not enough to understand the docs they've been given and b) don't have a tax professional b/c it's not economical (e.g., small investors for whom it wouldn't make sense to engage someone).  They are the people who are in the best position to accurately calculate the taxable income and deductible loss that should be reported to taxpayers in a way that is easy to understand and input.

AmCap

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Re: LC Tax Documents available now!
« Reply #21 on: February 02, 2013, 10:41:49 AM »
So, I see box 7 is empty... does that mean LC has not including their servicing fees in the calculation?

Nothing for FolioFn fees either.

LendingClub's service fee for the year, and the charge offs, can be found on the Year End Summary (linked from the Statements page).

Foliofn's fees can be found on their Year-end Summary (linked from the bottom of the My Account page.)


It would have been nice if these had been included on the 1099, but remember: your numbers don't necessarily have to match what's been reported, they just have to make sense and be justifiable if the IRS ever audits you.

(Of course, that begs the question: if the numbers don't match is that more likely to trigger an audit?)

The IRS has automated detection of under reported income from forms such as 1099s that are filed with them. If you under report, you will automatically get a letter from the IRS hat indicates they will assess additional tax and penalties after 18+ months from the filing date.

I would definitely not recommend it.

Yeah, like, don't evade tax.  I think (and hope) that 99% of people are trying to get it right and pay tax on their income and gains and deduct what they are legally entitled to deduct.

"Any one may so arrange his affairs that his taxes shall be as low as possible...there is not even a patriotic duty to increase one's taxes."

Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)

Famous little tax quote :-)

desk8149

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Re: LC Tax Documents available now!
« Reply #22 on: February 02, 2013, 11:53:16 AM »
So I am still really confused as to how to report my LC income & losses.  I emailed LC to find out when the 1099-B's would be out which according to their FAQ would show all charge offs.  This is the response:
Thanks for your question and your patience Unfortunately, our FAQs were incorrect.  Losses for the tax year will not be reported on a Form 1099-B but will be summarized on your year-end statement.

I do not use a tax professional as I am small invester and do my own taxes.  To simplify things, in past years, I ignored their 1099-OID since it only included notes earning over $10 and was much lower than my actual interest earned.  Instead, I claimed income equal to Total interest earned less fees less charge offs.  Now that they are submitting a 1099-OID to the IRS with all interest earned but no allowance for charge offs, it is much higher than I really earned.  How to deduct the losses without LC providing the documentation?  I know the total of my losses from the year end statement but not sure how to post that on my tax form.  Can we just show the charge offs in total as a capital loss on Schedule D without each note's basis, date acquired, etc? 

Please give me advice.  Thanks.

Computerizer

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Re: LC Tax Documents available now!
« Reply #23 on: February 02, 2013, 12:19:05 PM »
Thanks for your question and your patience Unfortunately, our FAQs were incorrect.  Losses for the tax year will not be reported on a Form 1099-B but will be summarized on your year-end statement.
I noticed this change as well.

How to deduct the losses without LC providing the documentation?  I know the total of my losses from the year end statement but not sure how to post that on my tax form.  Can we just show the charge offs in total as a capital loss on Schedule D without each note's basis, date acquired, etc? 

Looking at TaxACT (which I'm using this year), it has an option to include a statement with your return (the statement has to be mailed to the IRS even if you e-file) for capital gains & losses. But it still has to provide the basis and such. Since Lending Club's statement is very not helpful with this, I guess you would have to make your own statement (which TaxACT says I can do) which includes all this information ("property description, date acquired, date sold, sales price, cost or other basis, code, adjustment amount, and gain or loss").

I can log into my account and look through all of my charged off notes to see which ones were charged off this year, and easily see the date acquired, date "sold", and sales price ($0). Looking at my Prosper 1099-B, it looks like the basis should be the remaining principal balance of the note (at least for notes that I didn't buy on FolioFN). And the gain or loss would obviously just be the negative value of that. So I guess all the information is here to make a "statement".

desk8149

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Re: LC Tax Documents available now!
« Reply #24 on: February 02, 2013, 01:24:14 PM »
Thanks for the suggestion.  That is really labor intensive but if that is the only way to satisfy IRS requirements, I will have to do it.  It is unbelievable that LC doesn't provide this information in reporting to the IRS.  I can see a lot of IRS questions on these charge offs without a form submitted by LC.

If anyone has any other suggestions, please post them.  Thanks.

SarahV

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Re: LC Tax Documents available now!
« Reply #25 on: February 02, 2013, 01:37:08 PM »
Here's what I'm wondering... for those in FolioFN states, you have to buy everything on the Folio platform. Usually you pay a premium for a good note that is not in distress. Part of that premium is due to a 1% fee that Folio takes. Let's take the example of a note with a 2% markup.

The seller gets 101% of the par value of the note and gets to tax-deduct the other 1%. The buyer is on the hook for the whole 102% of the par value of the note and in essence loses 2% of what they paid for the note immediately upon purchase. Does the buyer get to take that as a loss somehow? As though you'd bought a stock for $25.50 and the price dropped to $25? Or is that not how this works? I really have no idea.

desk8149

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Re: LC Tax Documents available now!
« Reply #26 on: February 02, 2013, 01:53:30 PM »
[color=red]I can log into my account and look through all of my charged off notes to see which ones were charged off this year, and easily see the date acquired, date "sold", and sales price ($0). [/color]

Just to clarify, where can you get all this information the quickest way?  I can list my Charged off notes by date under "My Notes" but that view does not give me date acquired.  Where is the search to get all that information for charged off loans?  Thanks.

AmCap

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Re: LC Tax Documents available now!
« Reply #27 on: February 02, 2013, 02:32:58 PM »
The seller gets 101% of the par value of the note and gets to tax-deduct the other 1%. The buyer is on the hook for the whole 102% of the par value of the note and in essence loses 2% of what they paid for the note immediately upon purchase. Does the buyer get to take that as a loss somehow? As though you'd bought a stock for $25.50 and the price dropped to $25? Or is that not how this works? I really have no idea.

Hmmm good question. I think that would just increase your basis, so it would reduce your gain or increase your loss on sale or disposition.  There are also the bond premium rules, which I'm happy to admit I don't understand.

AmCap

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Re: LC Tax Documents available now!
« Reply #28 on: February 02, 2013, 02:40:04 PM »
Or would it be a Section 212 investment expense...I'll have to think on this Sarah.

yojoakak

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Re: LC Tax Documents available now!
« Reply #29 on: February 02, 2013, 04:24:28 PM »
[color=red]I can log into my account and look through all of my charged off notes to see which ones were charged off this year, and easily see the date acquired, date "sold", and sales price ($0). [/color]

Just to clarify, where can you get all this information the quickest way?  I can list my Charged off notes by date under "My Notes" but that view does not give me date acquired.  Where is the search to get all that information for charged off loans?  Thanks.

OUCH! MY EYES!

I don't think you can. You can get the total for the year on your Year End Statement,

But you'll have to look at the monthly statements to get the details.

Don't forget some of your charged off notes can have "Recoveries".