From the TradeLog website: Problem 1099 info they have dealt with so far: Charles Schwab Etrade Fidelity Interactive Brokers Penson TD Ameritrade TradeStation The IRS rules must be really badly written. It is hard to believe that these major brokers are all making similar mistakes. Jack
Extensions: Some traders may qualify for IRS penalty relief http://www.greencompany.com/blog/index.php?postid=145 It's getting too late to focus on complete tax return filings due by April 17. (April 17 is the tax deadline this year since April 15 is a Sunday and April 16 is a federal holiday in Washington D.C.) Instead, focus on filing an automatic extension to get an additional six months to file. While extensions are fairly basic one-page filings - listing estimated tax liability, taxes paid to date and balances due - you should be aware of several important strategies, pitfalls and relief from the IRS. Excerpts: New for 2011 tax returns: Form 1127-A relief Some business traders and other taxpayers may qualify for new relief from the IRS provided by filing new tax Form 1127-A, Application for Extension of Time for Payment of Income Tax for 2011 Due to Undue Hardship. If you qualify to use Form 1127-A rather than the automatic extension Form 4868, you will be exempt from nasty penalties associated with paying less than 90 percent of taxes owed by April 17, and related rules mentioned below............. Securities traders need to file extensions Due to the cost-basis reporting crisis on 2011 tax returns, we are advising securities traders to file for automatic extensions, rather than try to rush tax returns filings (with problems) by April 17. Securities traders need more time to request corrected 1099-Bs from their brokers and hopefully fully reconcile differences in trade-accounting reporting on Form 8949. We don't want traders to be audited by the IRS or to receive tax notices caused by reconciliation differences with 1099-Bs. If you haven't signed our Petition yet, please do soon........... File for an automatic extension It's important to file an automatic extension by April 17, whether you can pay the taxes owed or not. Paying what you owe is the safe way to avoid penalties. If you can't pay 90 percent, according to Form 4868 instructions your extension can still be valid if you demonstrate reasonable cause and these conditions in the eyes of the IRS:........ Penalties explained........ What to do if you can't pay on time? If you can't pay 90 percent of your tax liability by April 17, first see if you qualify to use Form 1127-A (see above) for special relief on paying later without penalties. But, file this form on time. If you don't qualify, file Form 4868 (Automatic Extension). If you are short cash, pay what you can, and try to impress the IRS with reasonable cause when you request penalty abatement after filing your tax return......... Don't forget new Section 475 MTM elections are due by April 17......
Last-Minute Tax Tips - WSJ.com Tax Report http://online.wsj.com/article/SB10001424052702304177104577310121246685642.html Ms. Saunders interviewed and quoted my partner Darren Neuschwander and me about the cost-basis reporting problems. See my comment #1. Kudos to the highly-respected Ms. Saunders for getting Fidelity and Schwab to admit to some errors on 1099-Bs. We showed Ms. Saunders our smoking gun blog and Webinar with major Fidelity and Schwab errors. But, these brokers dismissed the errors as minor and as representing a small percentage of their 1099-Bs. That's not what we are seeing on our client's tax files and hearing from traders. I guess it's hard for reporters to take on the biggest advertisers in the financial media. Please help by posting comments on this WSJ article. We need to pressure the brokers and IRS into fixing this mess. And, please keep signing our Petition. Thanks, we can fix this mess if we fight it together.
FWIW, my broker got Penson to issue a corrected 1099, but I notice that my request for Penson to upwardly adjust the cost basis of "covered" replacement shares was completely ignored, so the 1099 still is problematic. The shares were replacements for uncovered shares sold at a loss less than 30 days before the replacement shares were bought. I'm asking my broker to try again, and/or give me a reason as to why Penson isn't cooperating.
IB would not correct my 8949 even though the wash sales were totally out of whack on the QQQ trades I did. The cumulative loss I had for that stock for 2011 was carried forward into 2012. I did not trade the QQQ for the entire month of March so my wash sales from 2011 should clear up. I have to say I am not really confident that IB will get this right but I will have to wait and see as I wonât know for sure until I get my 8949 for 2012. I now trade mostly options as they have not started to consider wash sale reporting to the IRS yet. Robert Green do you know when the IRS will require brokerage firms to report cost basis and wash sales on Options ?? For stocks this year if I have a loss prior to the end of November I will not trade them in December so my wash sales will clear out. I am low a low volume trader â maybe I do 200 round turn trades a year. My cost reporting from Schwab seemed to be ok .
I believe my IB 1099 is wrong too, and wash sales are likely the culprit. The raw non-wash-adjusted trades in the Statement of Funds are correct, but I believe that something likely went wrong with the wash-sale calculations on both the 1099 and on the activity statements. Frankly, I have no idea exactly what the IB problem actually is, so I am reluctant to try to get it corrected, but the numbers just don't seem to jibe with the raw non-wash-adjusted trades. It isn't as erroneous as my Penson issue though.
One of our clients emailed us the below. Spoke a final time to Ameritrade regarding the Wash Sale. They use Commerce clearing(maker of Gainskeeper) for their tax reporting. They are suppose to be the experts. Because the IRS instructions on the WashSale disallowed line on the 1099 were vague, they decided to do cumulative wash sales (I know makes no sense). They state they are not saying these are wash sales disallowed per the rules. In fact, there is a Gainskeeper report on Ameritrade site, which I believe I gave x (CPA in our firm), that verifies I have no wash sales either. So I don't know what clarity the IRS will provide through the summer to allow me to file, but maybe we just include that Gainskeeper report along with a statement of how Ameritrade caclulated that line and that will prevent an audit. I don't know. Your the experts but just a thought. ---------- PS from Green. Gainskeeper doesn't do wash sales between stocks and options as the rules require for taxpayers. TradeLog does.
Hi I use gainskeeper from tda for last 5 years. Only trade stocks there. Finally import without conversion to turbotax with txf file. Tda didn't report wash sales had a dash I believe on their 1099b form.
I'm looking at an 8949 from IB. I'm confused about the general issue of how the "(G) Adjustments to gain or loss, if any", should impact the overall calculation of gains when including Sales Price and Cost or other Basis. Simple example: (e) Sales Price is 500,000 (f) Cost is 450,000 (g) Adjustment is 25,000 Without the Wash Sale Adjustment the overall gain would be 50K. But is the Adjustment added to that, or subtracted from it? Is it a positive, or a negative, in the calculation? Thanks.
Lindq: This is from the IB webinar on the 8949 - Calculating Gain or loss on Form 8949 Taxable Gain or loss for individual transactions is not calculated on Form 8949. To calculate gain or loss: Column E (sale proceeds) â Column F (cost basis) +/- Column G (adjustments ) = Gain or loss http://www.interactivebrokers.com/webinars/NewKidsWebinar_Form8949.pdf Jack