Botched 1099-B cost-basis reporting: The List

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

  1. #51     Mar 20, 2012
  2. EricP


    If they are reporting potential (not actual) wash sales, then are those numbers being reported to the IRS? Should the trader file their taxes to show no wash sales (as appropriate), or do they need to show the wash sales (matching the broker), then deduct back out the wash sales elsewhere?
    #52     Mar 21, 2012
  3. SteveH



    A similar question is why is it necessary at all to show wash sale trades during the course of the first 11 mos. when you have no intention of trading those instuments for all of December? That is, if there's no losses from wash sales to carry over into the new year then you have nothing to report which leads to you having to report all those "potential wash sales" loss carry-forwards in the first place.

    I got this kind of answer from the forums years ago. I don't report potential wash sales. I report actual ones.

    So, don't turn potential wash sales into actual ones by either trading those instruments for either all of December or some or all of January of the next tax year. Personally, I choose to take the December non-trading route so that the proof is reconciled on one year's tax form instead of two.

    And to the guy who asked about where to report Section 1256 contracts on his tax form...break down and pay 35 bucks and use a PC tax program and you won't have to worry about making those kinds of mistakes!

    I strongly recommend going to the forums for tax questions. You've got years of great answers from the very simple to the very complex posted there.
    #53     Mar 21, 2012
  4. Yes, brokers have filed these 1099-Bs with incorrect wash sale information with the IRS. Although, taxpayers are requesting corrected 1099s from brokers, some brokers may not have solutions in place to correct the wash sale information.

    We currently recommend reporting correct trade accounting, including wash sales on your Form 8949. Show the difference between your trade accounting and your 1099-Bs, so the IRS can match your reconciliation differences.

    We recommend extension filings and we hope to narrow the gulfs here after April 15th. We expect corrected 1099 filings, and hope the IRS provides some relief, like not matching cost basis, and issues further guidance.
    #54     Mar 21, 2012
  5. Eric has it right. He broke the chain on wash sales - making them all go away - by not trading any substantially-identical positions in December.

    I'll check the broker 1099 preparation rules to see if they are making an error in reporting potential wash sales versus actual wash sales. Remember, broker and taxpayer tax rules are apples and oranges. See my first Mar. 20 blog on that.
    #55     Mar 21, 2012
  6. Mr. Green,

    Last week you mentioned a push to hold off on the cost basis rules for this year. Do you have any updates on that?

    #56     Mar 22, 2012
  7. gkishot


    If brokers have to report all transactions to IRS, why is it required from the traders to report the same transactions on 8949 form? How the IRS expects an average trader to reconcile hundreds of trades on 1099B and 8949 form without a special software ( under assumption that the records by a broker and the records by a trader exactly match which is not the case most of the time) ? I've noticed that 8949 form prepared by IB does not match even IB's own records in the monthly statements). My guess is that 8949 is done by a back office and monthly statements are issued by trading desk. How is it possible to reconcile records that do not match?
    #57     Mar 22, 2012
  8. sprstpd


    There are circumstances where IB wouldn't know enough information to report your taxes properly. Yes, I have a few transactions where my Flex statements (and daily statements) do not agree with IB's 8949 worksheet. Not sure what to say on that except I am going to report what my Flex statements say and explain the difference to the IRS.
    #58     Mar 22, 2012
  9. Bob111


    ----I've noticed that 8949 form prepared by IB does not match even IB's own records in the monthly statements). ------

    yes...same for 1099...and when i asked IB same question(why records didn't match?)-their answer- talk to your tax i don't have one..the guys who create both reports are unable to answer this question.
    #59     Mar 22, 2012
  10. vikana

    vikana Moderator

    That's unfortunately not new. I have never been able to match things up to the penny. It's always off by a little bit, typically less than one dollar over a year. I suspect it's rounding, as I've never been able to find the discrepancies.

    A couple of week ago I had this crazy idea to import 2010 and 2011 into Quicken in the hopes of getting accurate accounting with wash loss etc. That produced a third and different result for cost base etc. Sort of embarrassing ...
    #60     Mar 22, 2012