Multiple Cap gains cost basis for US taxes for NRA

[apple123]

Hi

Need you help on some questions.

I came back to India in Jan 2006. So I think I'll file the tax return as NRA.

I sold off some stocks who had multiple cost basis.( I bought them at different times with diff prices). Few questiosn here.

1) How do I report the cost basis on the US tax ? Is it average of all the costs ?
2) Do I file it in Schedule D? How to report multiple cost basis in that form ?
3) I believe 1040-NR cannot be filed online. Is that true ?
4) Don't want to spend any tax filing fees.Looking for a cheaper option.
5) Will I be US taxed for Short term and long term capital gain for the US stocks I sold ? I am RNOR in India for 2006-2007 and 2007-2008.

Thanks,

[Desi]

Hi

Need you help on some questions.

I came back to India in Jan 2006. So I think I'll file the tax return as NRA.

[/quote]

I presume that you do not have a GC or USC and do not meet substantial presence test and hence you are saying you will file NRA,

[quote]
I sold off some stocks who had multiple cost basis.( I bought them at different times with diff prices). Few questiosn here.

1) How do I report the cost basis on the US tax ? Is it average of all the costs ?
[/quote]

You can list each sale transaction as individual sale and total up the costs for that security and that will be your cost basis. If this security sold was purchased on different dates, one has to separate, long term and short term sales and report the two separtely in appropriate sections on schedule D.

An NRA is not taxed on capital gains and ideally would not receive a 1099-B. Did you submit a W8BEN to brokerage? If not, you should attach an explanation to taxes as to why you received 1099-B, if you did.

[quote]
2) Do I file it in Schedule D? How to report multiple cost basis in that form ?
[/quote]

One, an NRA does not report capital gains on stocks. Second, have you looked at schedule D? I would suggest be more specific in your question and look at schedule D.

When a security is sold, it has one cost basis, not multiple cost basis.

If you sold 800 shares of abc for 12345 net of commisions, then your sale proceeds are 12345. Now if you bought these at 800 shares in 3 separate installments, say 100, 300 and 400 shares, you total up the cost and that will be your cost basis for 800 shares.

Alternately, you can report this as 3 transactions of 100, 300 and 400 shares by breaking up the sale proceeds of 12345 in those ratios.

[quote]
3) I believe 1040-NR cannot be filed online. Is that true ?
[/quote]
Yes, to my knowledge.


[quote]
4) Don't want to spend any tax filing fees.Looking for a cheaper option.
[/quote]

It is good to be frugal.

[quote]
5) Will I be US taxed for Short term and long term capital gain for the US stocks I sold ? I am RNOR in India for 2006-2007 and 2007-2008.
[/quote]

See earlier responses.

[apple123]

Desi,

Thanks very much for enlightning me. have few further questions.

I do not have GC or USC and I returned to india on Jan 26, 2006. So I guess I failed the substantial presense test as well. (less than 30 days in a year).

I purchased this stock at 3 different times but sold all of them at the same time. So I guess the cost basis will be the sum of all costs. (All were held for more than 1 year). Right ?

I did receive 1099-B as I did not know about W8-BEN. It's now in the TDAmeritrades's file. What reason should I give about receiving 1099 ? Is the "explanation" a plain letter to be attached with 1040NR? Or can I just ignore the issue for this year ?

When you say, NRA does not report the capital gains, do you mean to leave the the capital gain entry (line 14) of 1040NR as blank ? If I do enter the line 14, shoudl I attach the Scheduel D with 1099-B ?

Does turbotax or any other online software allows filling 1040NR ?
Or any desktoip software that allows filling up the 1040NR.?

Thanks

[Desi]

Desi,

[QUOTE]
I purchased this stock at 3 different times but sold all of them at the same time. So I guess the cost basis will be the sum of all costs. (All were held for more than 1 year). Right ?

Yes.

[QUOTE]
I did receive 1099-B as I did not know about W8-BEN. It's now in the TDAmeritrades's file. What reason should I give about receiving 1099 ? Is the "explanation" a plain letter to be attached with 1040NR? Or can I just ignore the issue for this year ?


Attach a plain letter explaining that you were US tax resident for year 2005 and for US tax year 2006, you are NRA because you:

Failed US Citizen or Green Card test
Failed Substantial presence test

However the brokerage sent you 1099-B in error.

File form 1040NR or 1040-NR EZ.

[QUOTE]
When you say, NRA does not report the capital gains, do you mean to leave the the capital gain entry (line 14) of 1040NR as blank ? If I do enter the line 14, shoudl I attach the Scheduel D with 1099-B ?


No schedule D. The first page is for US Source income which means salary earned through your Jan 26. Capital gains do not get entered. Read the instructions first on 1040NR and post questions afterwards.

[QUOTE]
Does turbotax or any other online software allows filling 1040NR ?
Or any desktoip software that allows filling up the 1040NR.?


You have to do paper filing.