4 ms·

> The challenge is that you personally need to report additional information for things like capital gains tax on asset sales, any credits/deductions you wish t

> The challenge is that you personally need to report additional information for things like capital gains tax on asset sales, any credits/deductions you wish to claim, and changes in your living arrangements or life status. Two things: 1. A lot of asset sales should be or are reported by financial institutions, so in the case of me selling stock through Schwab or whatever, it should still be handle-able by the IRS. 2. Okay yes, it's reasonable for me to put in my living status changes or tax deductions I want to claim, but they don't ask just for that, they ask for all the other shit too, all the stuff they already know the answer to. Why?

spullara 4y ago
1. If the IRS handles it without reporting they assume that your sell LIFO for the worst possible capital gains treatment.
- mywittyname 4y ago
  Vanguard gives me an option on how to treat capital gains for tax purposes.
- sidlls 4y ago
  The brokerages permit election of the method and can easily be made to report that along with the other details
- LiquidSky 4y ago
  In the theoretical new system, you could have an option to file additional elections or changes. The IRS would have a default that you could then vary if you chose.
- TulliusCicero 4y ago
  And as long as it's just the default, who gives a shit? Besides, as others have pointed out, there are ways to specify at the time of the sale. That's what Schwab does when I sell stock there.
ryandrake 4y ago
> A lot of asset sales should be or are reported by financial institutions, so in the case of me selling stock through Schwab or whatever, it should still be handle-able by the IRS. Your financial institution doesn't necessarily know your capital gains. It reports stock sales to the IRS, but often doesn't report the cost basis because it doesn't know. Consider: You buy 50 shares of ABC on Jan 1 2020. Then you buy 50 more shares on Jan 1 2022. Now you sell 50 shares of ABC on Jul 1 2022. Which bunch of shares did you sell? Was it a short term gain or a long term gain? Was it a loss? It depends. Neither your broker or IRS knows the answer, but you do. EDIT: The above information is evidently out of date by about 10 years. TIL
- jjav 4y ago
  > Which bunch of shares did you sell? Was it a short term gain or a long term gain? Was it a loss? It depends. Neither your broker or IRS knows the answer, but you do. Your broker does know because you need to tell them which ones to sell when you sold. The IRS also knows because that's included in the cost basis reported to them by the broker. (This changed some number of years ago, brokers used to only report the income from the sale but not the cost.) https://www.spencerlawfirm.com/2011/01/new-cost-basis-reporting-rules-effective-january-1-2011/ https://www.spencerlawfirm.com/2011/01/new-cost-basis-report...
  - ryandrake 4y ago
    Interesting. I learned something today. Thanks.
    - seanp2k2 4y ago
      ...and therefore there is even less reason for the IRS to not pre-fill forms or just have an exception-based filing system vs everyone has to file regardless of exceptions / amendments / challenges etc.
      - spoils19 4y ago
        What about including the free market of tax helper systems and services? You'll be wiping out an entire industry - doesn't seem very conservative to me.

spullara 4y ago

1. If the IRS handles it without reporting they assume that your sell LIFO for the worst possible capital gains treatment.

mywittyname 4y ago
Vanguard gives me an option on how to treat capital gains for tax purposes.
sidlls 4y ago
The brokerages permit election of the method and can easily be made to report that along with the other details
LiquidSky 4y ago
In the theoretical new system, you could have an option to file additional elections or changes. The IRS would have a default that you could then vary if you chose.
TulliusCicero 4y ago
And as long as it's just the default, who gives a shit? Besides, as others have pointed out, there are ways to specify at the time of the sale. That's what Schwab does when I sell stock there.

ryandrake 4y ago

> A lot of asset sales should be or are reported by financial institutions, so in the case of me selling stock through Schwab or whatever, it should still be handle-able by the IRS. Your financial institution doesn't necessarily know your capital gains. It reports stock sales to the IRS, but often doesn't report the cost basis because it doesn't know. Consider: You buy 50 shares of ABC on Jan 1 2020. Then you buy 50 more shares on Jan 1 2022. Now you sell 50 shares of ABC on Jul 1 2022. Which bunch of shares did you sell? Was it a short term gain or a long term gain? Was it a loss? It depends. Neither your broker or IRS knows the answer, but you do. EDIT: The above information is evidently out of date by about 10 years. TIL

jjav 4y ago
> Which bunch of shares did you sell? Was it a short term gain or a long term gain? Was it a loss? It depends. Neither your broker or IRS knows the answer, but you do. Your broker does know because you need to tell them which ones to sell when you sold. The IRS also knows because that's included in the cost basis reported to them by the broker. (This changed some number of years ago, brokers used to only report the income from the sale but not the cost.) https://www.spencerlawfirm.com/2011/01/new-cost-basis-reporting-rules-effective-january-1-2011/ https://www.spencerlawfirm.com/2011/01/new-cost-basis-report...
- ryandrake 4y ago
  Interesting. I learned something today. Thanks.
  - seanp2k2 4y ago
    ...and therefore there is even less reason for the IRS to not pre-fill forms or just have an exception-based filing system vs everyone has to file regardless of exceptions / amendments / challenges etc.
    - spoils19 4y ago
      What about including the free market of tax helper systems and services? You'll be wiping out an entire industry - doesn't seem very conservative to me.