I have about 200 plus forex / currency transactions all in 2011 (first year trading Forex). All of which were opened and closed in 2011. None held for longer than a month, most for a few hours. The brokerage is in the US and while the brokerage did not provide a 1099, they directed me to their customer reports as a replacement. I have all the transactions in excel with cost, sale, net, ticket #, etc. The net result was a loss of about 3,000. I also have the initial deposit amount versus my ending balance which equates to all the gains and losses for each individual transaction. I am completely baffled as to how to report these on 1040. I'm not sure where to report (using H&R Block Premier) and to report by transaction detail or as one grouped amount (Beg Deposit - Ending Balance). (A) I would like to follow IRC 988, Line 21 of 1040 even though I'm reporting a loss as this would reduce my income directly. (B) Less preferable since I have a loss is reporting using Section 1256 (C) The elephant in the room is to report on Schedule D, but not presented as a choice when looking at the IRS pubs and google for currency trades. I should also mention that because of the financial crisis, I have hundreds of thousands of short-term capital loss carryover on my Schedule D so anymore won't help me until decades from now.
IRS publications, google and more google.
You have two options to report these transactions. All will be on Form 8949 whcih then flows into Schedule D. You do not enter transactions directly on Schedule D.
Option 1 is to identify each transaction separately on the 8949. This will be fully e-fileable.
Option 2 is to create a summary transaction and enter it in the correct 8949. You may need to use more than one form 8949 if you have both short term and long term gains. If you e-file this return, when the IRS acknowledges the return, you will need to print out Form 8453 and mail it to the IRS along with a printed detail list of the transactions you summarized on the electronic return.
These are your only 2 options (or you could mail the entire return with all the detail)
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