And The Gain Is Very Small. Is This Correct??
Q: I have been told that if you have capital gains, a tax return must be filed even if you have no other income and the gain is very small. Is this correct??
A: -Technically no. If your capital gain and ultimately gross income are less than the filing requirement for that return, no return needs to be filed. However one *SHOULD* but isn't required to be filed if for nothing else, gross proceeds on the 1099B will probably reflect an amount that shows a return should be filed. -Possibly. If you have gross proceeds in excess of the filing requirement, file. The gross proceeds are all the IRS knows about without a return. -The problem is that all the IRS has to go on is the 1099-B they got from the broker, and in the eyes of the IRS, that amount is 100% taxable gain unless you show otherwise by providing the cost basis. So it may well be true that the actual gain you had is small enough that you technically don't have to file, but you might want to anyway if your total sales proceeds are more than the filing requirement to forstall having to exchange mail with the IRS over the 1099-B issue.