1099B Nightmare

Discussion in 'Professional Trading' started by NanoTick, Apr 7, 2007.

  1. I have over 5000 trades in 2006. On my 1099-B I got a total sales proceeds, but then there is a "SUPPLEMENTAL TAX INFORMATION" which lists all buy transactions. Using these information it shows a profit that's more than three times what I actually made! I'm a day trader and there is no mark to market issue.

    Should I ignore the 100 pages of SUPPLEMENTAL TAX INFORMATION and enter the information from my own record? Will this huge discrepancy be a certain cause for an audit?
  2. Far as I know, the only thing that gets sent to the IRS from trading is the 1099-B, not any supplemental. Sounds like that is just from your broker to try and help you fill out Sched D. Do those trades deduct commission?

    A computer will try to match up Gross Proceeds from Sales (Box 2) and from Box 8 and 11 - Aggregate profit ot loss from "Section 1256 Contracts and Straddles" (Form 6781 - Futures trades) to your return.

    If things don't match, you get kicked out for hand review/possible audit. But heck, a certain percent gets audited anyway. What a hassle that would be.

    Best idea: Get a tax professional to help, or if you have to, make an honest effort to pay everything you owe. The worst that will happen is some time lost and extra money from penalties and interest.

    Good luck.