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Posted by Arthur Kamlet on June 1, 2007, 10:42 am
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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).
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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