1099-B Brokers Report Proceeds but NOT Cost Basis?!?!?!

Discussion in 'Retail Brokers' started by jackpearson, Mar 13, 2012.

  1. Is it correct that for the items trades such as the VXX ETF, that brokers report to the IRS on the 1099-B your Gross Proceeds but NOT your cost basis???????

    My broker has done that & the 1099-B says my Proceeds on ALL my trades for all stocks & ETF's for the year was more than $1 million more than my Cost Basis because they didn't compute all the cost basis. Won't that make the IRS think I made more than $1 million in that account????
  2. Brokers this year reporting just the proceeds from sales of non-covered securities (ETFs) is the same as always. It was always up to you to prove basis by listing date, price and #shares bought, etc.

    But now you have to find the basis for the non-covered securities and add it to the already listed covered ones. And with incorrectly calculated wash sales it really throws a wrench into the whole mess.

    They better get this shiite straightend out by next year...
  3. so then it's normal for someone who traded stocks & ETF's to see a much larger proceeds vs cost on the 1099-B's due to no costs not being shown on ETF's?
  4. ask your / a tax accountant. if you have / find a good one, they are worth it.
  5. Bob111



    they are probably reported as noncovered and should be in your 8949

    read conversation above and\or check out IB webinar regarding tax reporting
  6. Bob111


    from my experience-most of them don't know s**t,when it comes to trading or tax\financial planning. i've seen accountants,who asks 800-1500 for tax simple corp return..when i double check it-i found at least 3-5 very serious errors.
  7. jokepie


    take this seriously. I recieved a IRS notice last week for 2010 yr. they went by proceeds on my 1099-b. I downloaded tradlog software - cost arnd 200, save some dime and is easy to use with broker connect tech. Gives all kinds of reports and analysis including reconcile 1099.
  8. Bob111


    did you provide your Sch D to them for 2010,when you file? basis? if you didn't -no wonder they went by proceeds. cause that's the only number they have in 2010
  9. jokepie


    I did that .. and been doing that fr a while.. may be it was a one off. But it sure got my heart pacing.
  10. Beware Botched 1099-Bs, Form 8949 At Tax Time

    Besides my Forbes blog above and interview in WSJ this past Sat, my partner Darren Neuschwander, CPA and I had a long interview today with Theresa Carey of Barron's. Ms. Carey writes the popular Electronic Investor column, and she just had the cover story this past week with her Annual Online Broker Review and Ratings.

    Our firm and some leading accounting industry groups want the IRS to back down on matching cost-basis reporting on the new beefed-up 1099s. New IRS Form 8949s are turning out to be a huge mess with large discrepancies in trying to reconcile correct trade accounting with botched 1099-B reporting.

    Mr. Neuschwander, CPA points out that it's like the prior controversy with the IRS over new 1099-K rules for reporting credit-card transactions. Due to blow back from the credit card and retailing industries, the IRS back tracked and said they would not match the 1099-Ks issued to tax returns. This will prevent an avalanche of inappropriate tax notices, alleging errors where none exist. That would otherwise be very disruptive to taxpayers. We want the same industry and media blow back, and back tracking from the IRS over their new 1099-Bs and Form 8949.

    It’s unfair to blame this mess on the brokers alone. The IRS was very late in communicating the new rules and they never even told the brokers about the details of Form 8949, with the different parts for covered versus non-covered, and Parts A, B and C. The IRS did not require standardized reporting and they should. So, traders with different brokerage accounts are seeing very different applications, and that further confuses the issues.

    There are two types of problems. Wash sales are very botched and brokers should have gotten that much better. Even when wash sales are reported properly by a broker – which is not the case from what we see so far - it’s not 100% correct, because wash sale analysis must be done across all your brokerage accounts, including IRAs. We are concerned that many unsuspecting taxpayers may over pay their taxes based on broker-reported wash sales that are not correct.

    The second problem is botched 1099-Bs and discrepancies on Form 8949. If the IRS turns off the matching program, then I am less concerned with that problem. We need the brokerage industry and media’s help in getting this relief from the IRS. If we blame this all on brokers, they may go into their shell, and not help us as taxpayers and tax preparers. Our goal is to turn off the IRS computers on this matching, and to prevent the IRS from sending out TP-2000 notices to millions of taxpayers over 1099-B and Form 8949 matching errors.

    For sure, plan to file valid extensions, and let the dust settle on this huge mess, first. You don’t want a refund that you later have to repay the IRS with interest and taxes, after a broker corrects a Form 1099-B later this year. You also don’t want to pay taxes now that you don’t owe. Plus, you don’t want to dance this crazy dance on reconciling with botched 1099-Bs, when we expect brokers to fess up and fix this mess later on, too.
    #10     Mar 14, 2012