Case Study 1: Carryover Losses

Taxpayers Jeremy and Janice Smith checked the "Yes" box for income from the sale of stock on the intake and interview sheet. The volunteer asks for details.

Volunteer Says		Jeremy Responds
Previously we discussed your dividends from the Pembroke Fund, reported on Form 1099-DIV. Did you have any other income from the sale of stock, securities, or other investments?		Yes, I sold some stock this year.
Do you have a Form 1099 for that?		Yes, I have this Form 1099-B and this stockbroker's statement.
We already discussed the capital gain distribution from the mutual fund when we entered the dividends. We'll examine the stock sale information now. I see the broker's statement has the sale details I need, but do you know when you purchased the Purdue stock?		I bought the Purdue stock back on July 13, 2000.
I see the sale date was March 10, 2021. That means the holding period for the stock was more than one year. They call that long-term and it determines both where the information is reported and the tax rate for any gain. Now, do you know the basis for the stock?		What is that?
That's what it cost you, including any broker fees or commissions.		Yes, it cost $10,053, plus I had to pay $35 in fees.
Have you had any other costs, stock dividends, or stock splits related to the stock since then, such as additional fees?		No, that's it. Wait, when I sold it, I had to pay $35 more.
That means that the basis for the stock is $10,088. The Form 1099-B shows that you received net proceeds of $8,859 when you sold the stock so the $35 you paid on the sale is already taken into account. We'll put all these numbers in the tax software. After I enter these other transactions from the broker's statement, we'll get a final net gain or loss on Form 8949 and Schedule D. This will determine the amount that will be reported on Form 1040.
Indicate Jeremy's responses to these questions on the intake and interview sheet.