Is my 1099-B incorrect?

NumberSix · Feb 27, 2023

I'm aware of no evidence, nor even the slightest hint that there is any connection between the problem with futures trade reporting on my broker's 1099-B, and my broker's involvement with any trades in stocks or any other type of instrument. I don't see why you think there might be a connection. But maybe that specializes in futures trading would be more motivate or more likely to get tax reporting correct - could this be what you are suggesting?

NumberSix · Feb 27, 2023

Overnight said:
You know, you could also call the IRS and ask them these questions directly before you file. Just a thought. IRS are mostly human, too.
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Nope. I called IRS. IRS officially refuses to discuss any question pertaining to futures contracts or other Sec 1256 instruments, which IRS officially considers "out-of-scope" for live assistance. IRS refuses to help me verify my belief that the broker provided an incorrect 1099 in regard to futures trades.

Business2122 · Feb 27, 2023

NumberSix said:
We had an open futures position, with a large unrealized loss, at the end of 2022. My understanding, from IRS Form 1099-B instructions, is that the broker's 1099-B should report that unrealized loss in Box 10, and my futures P/L realized on closed contracts in Box 8, and then their sum in Box 11. The result would be that only Box 11 would match the number resulting from MTM accounting. My definition of the word "realized" is that the position was closed during 2022; while "unrealized" means the position was still open at the end of 2022.

But my broker, who shall remain nameless, reported a value of zero in Box 10, which I believe contradicts the large unrealized loss on an open position. My broker, in Box 8, reported a value equal to Box 11, apparently treating both boxes as requiring MTM accounting, instead of just Box 11; whereas I believe Box 8 should only include realized P/L, not MTM P/L.

Broker refuses to fix the problems with boxes 8 and 10, or even to discuss it. Broker's explanation seems to be that all three boxes, 8, 10, and 11, should be based on MTM accounting; but my reading of IRS instructions makes me believe only Box 11 should report an MTM figure, not Box 8 and not Box 10.

(If our 1099-B is incorrect, then it actually does matter, because we've traded mixed straddles, and made a mixed straddle election, so that my futures trades are considered parts of mixed straddles, and therefore not subject to MTM accounting; but this sentence is in parentheses, because it is not crucial to the issue I'm raising.)

Can anyone, especially any tax experts or any traders experienced with trader taxes, chime in with their assessment of who is right, me or the broker? Some validation would help my efforts to persuade the broker at least to discuss the matter.
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You’re correct but it’s not essential for the broker to correct their errors, because you can just correct it yourself on the actual filing and attach a letter to your filing pointing out your brokers error

Situations like these point out the importance of traders spreadsheeting their transactions at least monthly, so when your broker errors you’ll have your IRS proof like @SteveM

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Is my 1099-B incorrect?

NumberSix

NumberSix

Business2122