Taxation

IRS Clarifies Schedule D Instructions

The IRS has announced that it will allow taxpayers to report capital gains and losses in summary form on 2005 returns, as pressed for by the AICPA.

After receiving comments from the AICPA about the burden imposed on tax practitioners, the IRS has released a statement clarifying the Form 1040, Schedule D instructions involving capital gains transaction recordkeeping. The instructions literally state that tax practitioners must enter the specifics of each capital gain or loss transaction on a separate line of the form.

However, based on the clarification posted to the IRS's website, tax practitioners should be aware that "...taxpayers may continue to use a substitute statement to provide all of the same information and in a similar format to lines 1 and 8 of Schedules D and D-1. They are not required to use the official version of Schedules D and D-1 to provide the details on each transaction...[T]he details of each transaction still must be provided with the tax return and not just upon request." View the IRS statement on their Web site.

The AICPA appreciates the flexibility of the IRS in clarifying the way it will accept Schedule D information so that tax practitioners will not be unduly burdened during the busy filing season. This is good news for all our members.