Thanks gk. Unfortunately I can't seem to reconcile the wash sales they report on even the simplest statement (only 8 trades for the year, none in December). So tomorrow I'll take it up with the broker and see what they have to say about it.
Thanks Robert. I always hate relying on someone else to make things right for me on an unknown or open-ended time horizon, but if brokers are actually complying that would be ideal. It sure feels like providing the right numbers (on time) with a detailed explanation for any discrepancies ought to be the right way to go, but I trust your judgement on the likelihood of that triggering a notice. Petition signed.
Hi guys I day traded stocks in 2011 with thousands of transactions. All of my positions were closed the same day they were opened. I never carried a position overnight. I noticed that my 1099 is showing a huge list of noncovered securities and box 6a is checkmarked. Will someone please explain what a noncovered security is and if I should have this since I am daytrading? Thank you
It just means that the IRS has not required your broker to report cost basis for those particular securities (yet). In the future, those securities will move to the covered section. There is nothing wrong with having securities in the noncovered section.
Thank you sprstpd for explaining this. I have one more thing I'm concerned about. When I opened my account with the broker, I opened a joint account with my wife. She is listed as the primary account holder on the account since she has a full time job, which met the requirements for opening the margin account. I was laid off at that time so I could not qualify to open the account under my name. When I do my taxes each year, I do mark to market under trader status under my name and ssn. Is it ok to do this under my name and ssn if we file taxes jointly since my wife is the primary holder?
It would personally make me feel uncomfortable. At some point, I would open a new account just in your name and just trade from there. Then if the IRS ever tries to contest your trader status, you would have more "ammo." If you were audited now, it may or may not be a sticking point. But I'd rather be safe than sorry.
See smoking guns on botched 1099-Bs from securities brokers in our Mar. 28 Webinar recording March 28, 2012 By Robert A. Green, CPA Our March 28 Webinar shows smoking guns on botched 1099-B reporting from brokers, apples and oranges in the rules between brokers and taxpayers and why itâs irresponsible to file a complete tax return based on these 1099-Bs. Any accountant who signs a tax return with these unreconciled differences is skirting on the edge of malpractice. Donât rush to file a return with these errors and problems. The early bird wonât get the worm; he may get audited by the IRS. See our three important Webinars on cost-basis reporting here. http://www.greencompany.com/EducationCenter/Trader-Tax-Center/Cost-Basis-Reporting.shtml#webinars In the March 28 Webinar, our TradeLog chief accountant shows a 1099-B reporting more than $50 million of incorrect wash sale loss deferrals because the broker reported potential wash sales rather than actual wash sales. TradeLog, however, reports the correct wash sales amount of under $20,000. TradeLog prepares Form 8949 and shows this $50 million plus net âadjustment,â really an overall difference, including the wash sale errors. We think itâs foolish to file a tax return with that type of large difference â it will surely attract undue attention from the IRS. Why not force the broker to fix the wash sale reporting first? Few brokers will reply to these requests before April 15. See how a second brokerâs 1099-B doesnât match TradeLogâs cost-basis reporting information. We simply canât trace the brokerâs cost basis amounts to any correct raw data in TradeLog â which downloads actual trades â and we canât imagine what the broker did wrong here. We know brokers sliced and diced raw data into all sorts of categories in an attempt to comply with new IRS rules and weâve seen several cases of bad accounting, where brokers adjust proceeds when they should adjust cost-basis and vice versa. Watch us demonstrate how this same broker provided the client with a âRealized Gain or Loss Reportâ in his 1099-B Supplemental Information (a section that is not sent to the IRS). This report continues a perpetuation of the unexplained errors stated above. If the client relies on this report, his tax return will be very wrong. We usually donât name names, but we do for these two large online brokerage firms. Itâs time they fess up. While TradeLog software is the best solution in most cases, you need to teach it how to handle your brokerâs 1099-Bs. There are many switches to turn on or off so TradeLog can simulate how your broker handled the cost-basis reporting rules. If you find differences, this is the first place to revisit. For example, did your broker report all ETFs or just securities ETFs (RICs)? The latter is correct. As we explain on the Webinar, itâs not uncommon to find download errors which require correction. Plus, TradeLog doesnât calculate corporate actions â you need to calculate those by hand. This year more than ever before, you need a trained TradeLog accountant and CPA firm to review your TradeLog data files, your accompanying Form 1099-Bs and other Supplemental Information provided with 1099-Bs. On almost every file to date, weâre finding incorrect accounting items that require our assistance, investigation and adjustment. Donât waste days or weeks pulling your hair out; get the help you need from a person highly experienced in finding the differences. File a valid extension by April 17 to have six more months to get this right. Donât forget about the very important Section 475 MTM election due by April 17 with the extension filing, too. Our Petition to Rally Congress is having impact! 559 People Have Sent 1,323 Letters and Emails. We need 20,000 signers and 50,000 letters and emails. Please sign, and also share it with others. http://greentradertax-traders-assoc...lief-on-irs-cost-basis-reporting-ru/?m=758320
>>We usually donât name names, but we do for these two large online brokerage firms. Itâs time they fess up. << So who are the two large online brokerages? And has any broker done a good job on this?
We name the names in our Webinar since we showed redacted 1099-Bs but anyone in the know can recognize them by broker. We showed example problems for Fidelity and Schwab, but I've seen reports from our CPAs and TradeLog about problems with almost every broker and clearing firm. It's a wide-scale problem. TradeLog lists some known problems with various brokers on their site under Tax Topics http://www.tradelogsoftware.com/tax-topics/1099b-problems/. I was hoping this Thread could assemble a good list, too. Our CPAs and TradeLog accountants are very busy now before April 17th. We will all reply more with known problems after 4/17. File an extension now as best you can. Our blog gives info on extension relief tonight, posting soon. Thanks.