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2015 Tax Printer and Cost Basis adjustments
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I'm the club's current treasurer. I am having two issues with the 2015 Tax Printer and Club Accounting 3 that I'm not sure how to resolve.
1. We sold all of a stock this year. I found a reinvested dividend from 2011 that had a typo in the dividend amount (off by $1). The stock amount was correct, but it affects the cost basis. Although I can edit the transaction in Club Accounting, when I rerun the Tax Printer, it sets the date of that transaction to when we sold the stock and it messes up the short term and long term numbers. How can I fix that? I entered the correct amount in the 1099 wizard cost basis box in Tax Printer but that does not affect the outcome.
2. We owned National Oilwell Varco which had a complicated spinoff. Until we sold the stock, the cost basis shown for both the original and the spin off was the full amount. At the time, a couple years ago, I split it in the spinoff wizard as close as I could. But now that we sold all of it, we're off from the broker 1099 by $14. Again, I cannot seem to enter an adjustment into Club Accounting nor into the 1099 wizard box in Tax Printer.
So, my tax form 1065 is off for our LTCG by $14 and I'm sure that will be flagged when it does not match what the broker provides.
What can I do?
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Issue 1 - You should be able to edit the reinvested dividend without changing the date of the transaction. When editing just be sure to check the date has not changed. You might just leave it alone. You did not report the extra dollar in dividend income in 2011 but your cost basis is lower by a dollar. This means you'll have a dollar more in capital gain this year when you sold it. So you are recognizing the income this year that really should have been recognized in 2011. I don't think the IRS will bother you for a dollar especially since it will be split among your members.
You cannot change your cost basis in the tax printer. It reads your cost from the accounting records. Entering a broker cost basis does not change your gain. It will cause the column for "Adjustments" on form 8949 to be populated if your basis is different from the basis reported by your broker.
Issue 2 - I'd have to see your data and do a bit of research on this spinoff. In general, spinoffs need price per share information to determine the cost basis allocated to each company involved. If you do not use the exact same price as your broker your cost basis will not match. In some cases a spinoff is accomplished via a taxable dividend. In this case the cost basis of the parent stays the same and the cost basis of the daughter is the market value (dividend amount) on the spinoff date. Again, what is "market value" is not strictly defined by the IRS in these transactions so you can differ from your broker.
The amounts you state are unlikely to be significant to the IRS. The spinoff difference is likely to be just a difference in what "market value" was to you versus your broker. You are NOT required to match your broker's 1099 data, even the data they report to the IRS. Remember, the form 8949 includes a column for Adjustments to record the difference between the cost basis in your records versus the broker's records. They were (and still are) expecting differences to arise. A spinoff is a very good example of a transaction where cost basis can differ between the broker and your records and both could be considered "correct".
Russell Malley
StockCentral Community Leader
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2015 Tax Printer and Cost Basis adjustments
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