A new tax season is upon us, and along with it a new tax reporting rule for capital gains. It’s not a big change but, as Robert Wood writing for Forbes reminds us, any change to something as important as the capital gains tax is worth noting. From the IRS news release:
New Way to Report Capital Gains and Losses
In most cases, taxpayers now use new Form 8949 to report capital gain and loss transactions. Schedule D, the form traditionally used to show these individual transactions, is now used as a summary sheet, reporting amounts for total sales price, basis and other adjustments for all individual transactions, and for figuring the tax. For securities both bought and sold in 2011, the Form 1099-B, issued by the broker, normally shows the taxpayer’s basis. The information on this form will help taxpayers correctly fill out Form 8949. See the instructions for Form 8949 and Schedule D for details.
If nothing else, let this practical change remind you of the very practical reality of capital gains and losses, and how those gains and losses can affect your planning strategy. While most people’s goal is to leave their assets to their loved ones, many are also concerned about avoiding unnecessary gift or estate taxes on front end, and inheritance or capital gains taxes on the recipient’s end. Remembering that your investments can have an effect on your estate plan (and your heirs’ taxes) can help you maintain an effective and coordinated wealth transfer plan—particularly when it comes to the taxable basis of the assets).
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