Mike C <f3pb8m$s7n$1[at]panix3.panix.com> wrote:
- quote -

Since you already received a Notice from the IRS, I would
fill out a Corrected Schedule D (Mark Corrected and date in
Red at top) and send a letter along with it and the notice
itself, and explain in your letter that, as shown in the
Corrected Sch D, the Excess of 1099-B amounts over Sch D
Sales Columns was due to the short positions listed in the
Corrected Sch D remaining open as of 12/31/06.

In the future, Sch D should contain those short sales
amounts along with a notation they remained open at year
end.

Do not file a Form 1040X since they are already examining
your return and you are now explaining the difference.

--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

I guess what I am wondering is do I have to amend my 2005
return or just let them know the difference was due to open
short positions? I notified them already but did not amend
my return.

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Mike C <michaelj...[at]hotmail.com> wrote:

- quote -

To make your total coorespond with the total of your 1099-Bs
you must report all sales. If you didn't close them that
year, report the purchase information (price, purchase date
and profit) as "open short".

ed

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Mike C wrote:

- quote -

I viewed 550 as well. You are right, it's lacking. Given
that a broker will report a short sale the same as a sale,
that's what the IRS tries to reconcile. Purchases, i.e.
cost, isn't really tracked by the broker (IRS wants to
change this) but sales are. So a short sale that remains
open through the end of the year needs to be reconciled, and
noted on the return.

JOE

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Mike C <michaeljc70[at]hotmail.com> wrote:

- quote -

Pub 550 used to be more exacting, and more helpful

The best I could find this year is a Pub 550 statement right
in the middle of page 67 that says Emily reconciles the
Schedule D Sales columns and makes sure they are not less
than the reported amounts of the 1099Bs.

Then you can use your memory of what the Pub or the Schedule
D instructions used to say, and attach a statement when the
1099Bs are more than the Sales Price columns.

But when you have short positions remaining open at year
end, just say so right on the schedule D.

I do this by entering "Short position remaining open
12/31/06" on the line below the report of the short sale.

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I got a notice from the IRS for 2005 for discrepancies on my
Schedule D. I looked at it and it turns out I had sold short
shares that were not covered until 2006 and therefore did
not need to be reported on my D (but were reported by my
brokerage on the 1099).

My question is is it a requirement to include a statement
explaining this or is it just smart to avoid getting the
letter (and hassle) later? I looked in Pub 550 and didn't
see anything stating this was a requirement (or even
suggesting to do it).

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