This is a followup in case anyone is interested. I have been looking at the IRC and the CFR to figure out what is going on and I think I have found answers: From 26 C.F.R. § 1.988-1 Certain definitions and special rules: From 26 C.F.R. § 1.988-2 Recognition and computation of exchange gain or loss: It is not intuitive to me, but it is clear from these examples that Interactive Brokers is reporting the basis and proceeds correctly for foreign securities. And because I can find no counter-examples for mark-to-market accounting, if I hold a stock across a year boundary I must act like I sell the stock on the last trading day in December. And that implies the foreign security would have settled in January of the next year. So I must use spot values in the next tax year in order to calculate the correct proceeds.
I think the main problem for MTM (mark-to-market) filers is that the wash sale figures on the 1099 do not distinguish between amounts that have been added to the cost basis for same-year transactions vs. those that have been carried over into 2012. If wash sale amounts canceled out as they were expired ( > 30 days) then the wash sale totals on the 1099 might be only the amounts being carried over to the next year, in which case the 1099 and MTM totals would be fairly straightforwardly related. But it doesn't work that way -- the wash sale amounts accumulate, and are offset only by amounts added into the cost basis. Both adjustments are always going up, never down, and the Actual disallowed amount is the difference between these two ever-increasing values. The problem is that at the end of the year, any outstanding wash sales (which ARE included in the wash sale totals) have not Yet been added to a cost basis (they will be in the cost basis for 2012, and hence ARE NOT in the 2011 totals). Thus there is NO WAY for a MTM filer to reconcile with the 1099, because the 1099 does not show how much of the wash sale amount has been carried to 2012 (and hence is Not offset by basis adjustments in 2011). Next year this will be affected by carry-over from the prior year as well, so it will be opaque at both ends. Am I wrong? (I hope so, because I file MTM...)
In my notes to the IRS this year, I mention that there is no way I can reconcile my totals with 1099-Bs. I can sort of estimate a range of possible "correct" values from the 1099-Bs but nothing more than that. For MTM filers, the 1099-Bs are simply incompatible. And one of the main reasons to choose MTM accounting is to eliminate the need to deal with the wash sale rules. So it seems like you would be justified in ignoring the 1099-Bs altogether.