Botched 1099-B cost-basis reporting: The List

Discussion in 'Retail Brokers' started by Robert A. Green, Mar 10, 2012.

  1. nkhoi

    nkhoi Moderator

    poorly drafted or not most traders will show losses anyway thus there is no incentive to spend time on it.
    #21     Mar 12, 2012
  2. This was posted by me in another forum.

    I should note that the wash sales IB reported were far in excess of what they should have been however my actual calculated gain for the year appeared to be correct. Like the woman in the example with the 450 K wash loss , mine was crazy as well. IB calculated a 54 K wash loss on my QQQ trades – this is impossible because my total loss for 2011 trading the QQQ was only about 2 K most of this was made up of small losses. I keep a very small amount in my IB account as well – only about 30 K which is enough for the type of trading I do. Someone at IB did look into this but said that IB calculated this correctly. Something about calculating wash sales on intraday trading lot by lot. Bottom line I got the proceeds and costs basis on my schedule D to tie back to the 8949 from IB with what looked like the correct gain for the year after taking wash sales into consideration. I think not having these numbers tie would trigger a notice more than some crazy wash sale numbers. My concern will be 2012 when these wash sales go away. I will not trade the QQQ for the month of March , I have traded it for January and February. I will also not trade the QQQ in December is I have any loss going into that month from prior trades. My wash sales should go away but will IB now show a taxable loss of 54 K when all is said and done !!! ??
    One other note – because all my QQQ trades were shorts the wash sale adjustments were made to my proceeds not my cost basis. Both Ib and Schwab did this.
    #22     Mar 12, 2012
  3. Beta4Me


    Well, I may be cooked. I've done 5000 trades a year through IB for the last 5 years. They never facilitated specific identification in any way. Instead they always said "you can track that", which I did. (No provision to mark sales to purchases before clearing) So I have matched buys to sells in Excel, getting some long term gains while avoiding wash sales like the plague (when selling at a loss I always totally liquidate the position and stay clear for 31 days) Now the new 1099 with basis hits, but it's for FIFO that they calculated. I'm on a different track - back for all the years. What a mess! Not sure where to start.
    #23     Mar 12, 2012
  4. Just got my 1099B from Penson. Not sure what to make of it. Anyway I have a few questions:

    It lists a ton of non covered trades and at the end of those it just lists a total of those non covered sales (but no cost basis). Why is that?

    For all the other trades it lists my 2011 total proceeds and my cost basis pertaining to those trades.

    How the heck do I make this match my own numbers?

    #24     Mar 12, 2012
  5. Jreality


    I just got a Penson 1099-B, and shares bought in 2011 that were really REPLACEMENT SHARES for shares that were originally bought in 2010 (but which had been sold at a loss in 2011) were treated as there were NOT replacement shares. They were treated as brand-new purchases, even though bought back less than 30 days after the previous sale.

    In other words, if I bought a security in 2011, and it was replacement shares for a sale that was a loss on a security that was purchased in 2010, then that wash sale was not added to the cost basis of the replacement shares, even though the wash sale itself occurred in 2011. The replacement shares were treated as brand new shares, and reported as covered securities without the necessary adjustments.

    In other words, for covered securities, Penson ONLY accounted for wash-sales if all the shares were originally purchased in 2011 free and clear of any previous wash-sales.

    How do I handle this? Should they be correcting the 1099 for me?

    ADD: Now that I think about it, this is alarming, because, on the 1099-B it makes it look like I now have more gains than I should. Can I demand Penson correct the 1099?
    #25     Mar 12, 2012
  6. 1099-Bs are dropping like bombs on taxpayers now. Many traders are flooding their broker's support lines and the brokers are not admitting their errors. Yes, formally demand a 1099-B correction, but you probably won't get one.

    Use TradeLog or other software and be sure of your trading gains and losses. Figure the brokers are very wrong and that explains reconciliation adjustments on Form 8949.

    We, and the AICPA will try to get the IRS to back track on Form 8949 since its an incredible mess with all brokers applying the new rules differently. The only commonality is very botched handling.

    File an extension based on TradeLog and stay tuned for developments. Don't drive yourself crazy with this. It's reconciling with lunacy. Wait for brokers and the IRS to clean up this mess first. Plan to file your returns in late summer or early fall. Try to file earlier only if you want your a big refund.
    #26     Mar 12, 2012
  7. Jreality


    I'll definitely be filing for an extension. By the way, according to my calculations, the Penson error, in which they failed to adjust my cost basis as the result of wash sales, makes it appear that my capital gains for the year are around $1,830 greater than they should be.
    #27     Mar 12, 2012
  8. jokepie


    I just downloaded and user trader log - downloaded everything using broker connect. Works like a charm and prints tax forms for you as well. I recommend it.
    Hope fully this will clear IRS notice.
    #28     Mar 13, 2012
  9. Good, TradeLog is the answer. It will show the correct trading gain and loss with wash sales, too. But, it will also show the discrepancies with the 1099-B and if they are large, you want to trim them down with 1099 corrections before filing. You don't want the IRS looking into large discrepancies on your Form 8949, between your trade accounting (the correct one) and very botched 1099-Bs. The IRS tends to believe brokers and they should not this year.
    #29     Mar 13, 2012
  10. GainsKeeper might be a good way to go also, have had good luck with them in the past but haven't used recently. TDAmeritrade provides complementary access to GK.
    #30     Mar 13, 2012