Stock Sale Date

Today TaxMama hears from Stephen, a MarketWatch reader, who has this question. “I sold some stocks on 12-27-06. The settlement date was 1-2-07. The stock brokerage company sent me a Form 1099 without this sale because the settlement date was after 2006. Can I report this sale in my 2006 tax return? Will the IRS question me because the Form 1099 they received from my brokerage company will not include the sale?”

Hi Stephen

I understand your confusion. You can do it either way, if you like.
Technically, for tax purposes, IRS Rev. Rul. 66-97, 1966-1 C.B. 190 , states that both stocks and bonds “are considered acquired or sold on the respective ‘trade dates.’ “

The only thing is, if you report the sale in 2006, the 1099 that IRS will get for 2007 will include that sale.

Will you remember next year, that you’ve already reported the transaction?
Or will you report it again?

IRS matches those 1099s to your tax return.
If you report more sales than the 1099s show, you won’t have a problem.

But if you report a lower dollar amount in sales next year, even though you’re correct, you will get a letter from IRS asking for the missing information.

So, with that in mind…it’s up to you!

And remember, you’ll find answers to lots of questions about gains and other tax information, free. Where? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]

To make your comments, please visit TaxMama’s Parlor at TaxTwist.com.

  • Ask TaxMama :: Where taxes are fun and answers are free
  • TaxTwist.com :: Where TaxQuips will be moving & You can add your comments

File Download (1:38 min / 0.4 MB)

Leave a Reply