- quote -

Yes.

They expect that the Sales columns of Schedule D to be at
least as large as all 1099-B's.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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jwa335[at]juno.com (John=A0Amburgey) noted:

- quote -

Absolutely right, John. If there's no explanation, the IRS
matching program will assume the entire amount was income
[which you failed to report]. Of course you can then
explain, but who wants to get into an exchange of
correspondence with a computer? <G
In my experience, brokers are not good advisors for tax
matters (even HR Block brokerage).

If there's a 1099B, there ought to be an entry on Schedule D
-- one way or another.

Bill

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"John Amburgey" <jwa335[at]juno.com> writes:

- quote -

He's almost right. Not bad, for a broker :-).

He's right that when you ultimately sell you will have
to reduce your cost basis by the amount of the return
of principal distribution.

But since it was reported to the IRS, it's wrong
to say you should ignore it.

- quote -

Yes, the IRS will be looking for it.

As I noted in my first reply in this thread, you should
report in on your Sched D with a cost basis equal to
the amount of the distribution so that there will
be zero gain or loss.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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- quote -

BRAVO??? BRAVO???

Harlan, someone had to DIE to get this result :^)

Thanks!

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

The Trust Fund has not been liquidated. My Broker advised me
to ignore this return of principal until the fund has been
liquidated and then reduce the Cost basis by that amount at
that time. My question is will the IRS be looking for this
to show up somewhere on Schedule "D" since it is noted on my
1099B?

Thanks

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Arthur Kamlet wrote:

- quote -

I recently saw something suggesting that rules similar to
"gifted" property might also apply to "inherited" property
when FMV at date of death is LOWER than basis (ie: a "step
down" situation). In other words, TP-2 might have a basis
for LOSS purposes of $300, but a basis for GAIN purposes of
$600.

I am reasonably sure that such treatment is NOT applicable
to inherited property and that you should only have ONE
basis (the DOD FMV of $300 per our example). But, I am
curious as to other opinions on this point.

MTW

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"Arthur Kamlet" <kamlet[at]panix.com> wrote:
- quote -

Ok. Fine. By definition, you cannot have a return of
principle in excess of ORIGINAL cost basis.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Arthur Kamlet wrote:
- quote -

BRAVO!

ChEAr$,
Harlan Lunsford, EA n LA

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David Woods, EA, ChFC, CLU <dwoods[at]woods-financial.com> wrote:
- quote -

OK, just humor me here.

I'll try to take longer than I need :^)

TP holds a publicly-traded Bond Unit Trust which
periodically redeems its holdings, generally on bond
maturity, and holders of the units receive return of
principal.

The market price of the units vary with interest rates, the
change of ratings of its bonds, and the latest elections.

TP buys at Original issue of $1000, the trust over the years
has thrown off $400 of return of principal, lowering basis
to 600, and due to market conditions, is now worth only
$300. I exagerate but it could have lower market value than
basis to original holders.

TP dies and TP-2 inherits when FMV = 300. I assume TP-2
has basis of 300.

Conditions improve and market value rises back to 600. At
this point the trust throws off another 400 return of
principal, leaving original holders who stayed the course
with a basis of 200, but our friendly TP-2 receives 400 with
basis of 300.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"Arthur Kamlet" <kamlet[at]panix.com> wrote:
- quote -

By definition, you cannot have a return of principle
in excess of basis.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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David Woods, EA, ChFC, CLU <dwoods[at]woods-financial.com> wrote:
- quote -

Every return of principal reduces basis.

Is return of principal in excess of basis, taxable?

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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John Amburgey <jwa335[at]juno.com> wrote:

- quote -

If it's on the 1099B report it a a sale on Schedule D.

Use it to reduce basis, but not below zero.

If basis is 1000 and return of principal is 400, then report
sale of 400, cost of 400, gain of zero, and new basis is
now 600.

If next year, with new cost basis of 600, you get a return
of principal of 700, then on Schedule D, report sale of 700,
basis of 600, gain of 100 and new basis of zero.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"John Amburgey" <jwa335[at]juno.com> wrote:

- quote -

Return of principal BY DEFINITION is not income.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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John Amburgey wrote:

- quote -

A return of principal reduces your cost basis in the
applicable asset. As long as that asset still has an
adjusted cost basis, there is nothing to report. If the
return reduces your basis to less than zero, then the amount
in excess of zero cost is a taxable capital gain.

--
Alan
http://taxtopics.net

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jwa335[at]juno.com (John=A0Amburgey) wrote:

- quote -

It should be reported on Schedule D. If you're using
software, link to a spreadsheet and you may find a column
with a code option for "Return of Principal." If you're
submitting a paper return, simply report your cost basis as
the same as your proceeds -- thus creating - 0 - as your net
income/loss.

Bill

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"John Amburgey" <jwa335[at]juno.com> writes:

- quote -

Enter it on Sched D with a cost basis entry equal to
the amount received so that there is neither gain
nor loss.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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"John Amburgey" <jwa335[at]juno.com> wrote

- quote -

If it's on the 1099-B, the IRS will be looking for it on
Schedule D.

Sales price = cost basis, done.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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One item listed on my 1099B is a "Return of Principal" for
an Energy Trust Fund I own. How should this be treated for
Tax purposes? Should it be entered on a Schedule "B" or "D"
Form and where?

Thanks

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