Should I file?

[T M]

I took 2004 off. No W2.. I'm single, no kids. Very little activity
with taxable income. CD interest and sold 2 stocks. Total proceeds
and Interest under $6000. I know that's under the limit, but I read
somewhere that you may have to file anyway due to the stocks. TIA..

 

[Harlan Lunsford]

I took 2004 off. No W2.. I'm single, no kids. Very little activity
with taxable income. CD interest and sold 2 stocks. Total proceeds
and Interest under $6000. I know that's under the limit, but I read
somewhere that you may have to file anyway due to the stocks. TIA..

Sale of stocks result in having to report the GROSS
proceeds, and therefore account for and deduct cost of
stocks.

So then, the answer is yes, DO file.

ChEAr$,
Harlan Lunsford, EA n LA

 

[DORFMONT]

This is one of those unusual situations where you have to
file to prove that you don't have to file. If you do not
report your stock sales as profits and losses, the IRS will
assign a cost basis of 0 to each one and tax you on the full
proceeds. If you are definitely no one else's dependent, you
may want to accept this 0 basis since your $6000 proceeds
does not equal the stadard deduction plus personal
exemption.

Linda Dorfmont E.A., CFP, CSA

 

[Herb Smith]

I took 2004 off. No W2.. I'm single, no kids. Very little
activity with taxable income. CD interest and sold 2 stocks.
Total proceeds and Interest under $6000. I know that's under
the limit, but I read somewhere that you may have to file
anyway due to the stocks.

If a Schedule D is required (to report the stock sales),
then you should file to let the IRS know what the taxable
gain is on those sales.

If you have any self employment income over $400, you have
to file to report the SE taxes due.

 

[Seth Breidbart]

I took 2004 off. No W2.. I'm single, no kids. Very little activity

Sale of stocks result in having to report the GROSS
proceeds, and therefore account for and deduct cost of
stocks.

So then, the answer is yes, DO file.

But the Gross proceeds, along with interest, are still under
$6,000. So even though the net is smaller, why would he need
to file?

(Could there be carryforwards from prior years that affect
this?)

Seth

 

[D. Stussy]

T M wrote:

Sale of stocks result in having to report the GROSS
proceeds, and therefore account for and deduct cost of
stocks.

Gross proceeds is NOT gross income. Gross income includes
capital GAINS, not the gross proceeds from a capital sale; a
fact that the IRS often IGNORES.

Your filing requirement is based on gross income - or any
[other] tax being due. You are not required to file.

You may still WANT to file.

 

[Harlan Lunsford]

I took 2004 off. No W2.. I'm single, no kids. Very little activity

But the Gross proceeds, along with interest, are still under
$6,000. So even though the net is smaller, why would he need
to file?

I agree that technically maybe no requirement, and I'm
certainly not one to do unnecessary work, preferring when
any other income is less than filing requirement not to
file.

However from experience, here is one area in which IRS will
try to match and if no match send the "why" letter.

Actually I acquaint a client with the facts and let client
decide in such a case.

ChEAr$,
Harlan Lunsford, EA n LA
Mon 7 Feb 2005