I have no idea , but I am not an options or commodity DEALER. just traded the stock like an individual investor few times short term .I also read the instructions,my guess is turbotax is assuming it as by default any again from 1256 as self employment income.
On Form 8949, you would report a transaction that matches your brokerage 1099-B exactly. Then you would add another transaction that solely deals with the cost basis adjustment and attach a note to the IRS explaining it. Or do you mean, what if your broker reports your cost basis correctly adjusted for the K-1 partnership activities? I know of no broker with that capability. Do you?
This post is from awhile ago, but possibly it could help you? I don't have TurboTax so I can't check. But maybe there is a part in the interview process where you have to clarify that you are not a dealer. Just make sure your 1256 contract income is not transferred to your self-employment income. And as a last resort, override TurboTax's numbers. However, I searched online and could not find people complaining about your problem, so maybe you are missing something. http://www.elitetrader.com/et/index.php?threads/futures-trades-and-turbotax.159097/#post-3135317
Could anyone be kind enough to post a 2014 K1 for SVXY with their personal info redacted from it? Seeing what's typically reported could be very useful for planning purposes. Thanks in advance.
I just joined elitetrader specifically to tell sprstpd that you could be the only person on the entire internet who understands that k1's duplicate gains or losses on 1099b's. You're answer here is the first good explanation of the issue, so thanks. It's incredible how many wrong responses there are on turbotax concerning this issue. And they're from accountants. So few people even understand there's a problem. So from your response here I figured I'm adding trades to my capital gains page to fix this rather than changing the reported cost basis. There's a good solution also on youtube btw. If they IRS questions me, I'm telling them sprtsd advised me.
I agree that there is very little information out there that actually makes sense. Could you please give a link to the youtube video in case it might benefit someone?
The title is Avoid Schedule K-1 and 1099-B duplication for some ETF's He's using Tax Act. I use Turbo Tax. He adds a trade on, as you suggested, rather than adjusting the reported basis. I can't tell you how much time I spent on this. I knew it was reporting twice but didn't know the best way to fix it. And the turbox tax help is useless. To be fair I got a guy on the phone who understood me. Anyways Thanks again
Sprstpd: I found this thread today (it's 2017 now), and you are still the only one on the internet who properly explained this. Kudos! I ran into this with UVXY, and I figured the cumulative adjustments to tax basis would somehow offset the capital gain/loss reported on K-1 (I noticed that they add up to about the same amount as is reported in 11C), but wasn't 100% sure and didn't know exactly how to file it. I still have a question on that: would you file the adjustment entries under the same classification as the original ETF is reported, e.g. my UVXY trades are reported to me as section B (short tem, tax basis not reported to IRS), so the adjustment would be 'B' as well, right? BTW, I wanted to share some observations that helped me understand the issue. For Proshare ETFs, you can go to https://www.taxpackagesupport.com/ and access your K-1 online, and you can also edit your transactions. My transactions were originally incomplete, Proshares thought I started the year with zero balance, which was not correct. So I called them and they simply added a new opening transaction and regenerated my K-1. I found that weird, as how can you issue a tax report based on someone giving you a transaction over the phone? Now I understand why: it is eventually irrelevant, because you would offset whatever number is spit out on the K-1. Anyhow, I corrected my starting balance, and my K-1 reported a loss of $90K. I go, WTF, I didn't lose that much! Looking at the transactions, it looked like my broker didn't report a sale on a specific day. So I called Proshares again and added a new transaction. Then my K-1 income jumped to 33K. That was even more concerning as now I would need to pay ~10K tax on it? what? Then I realized that it wasn't a missing transaction, but a reverse split that UVXY had. So I got that corrected again, and now my income is only 6K. And then I realized: this number is bogus. I have multiple version of my K-1 now, and in each case, the gain/loss reported on K-1 is being offset by the cumulative adjustments in the sales schedule. I could pretty much file anything, even wrong data entered with Proshares over the phone, because whatever I report on the K-1 boxes, would be offset by the sales schedule adjustment. Duh. What a stupid and confusing form.
Yes, you would classify the adjustment under the same classification because in reality you are affecting the original transaction (by modifying its cost basis). If clarity was not your goal then you would just modify the original transaction. I don't know if there are any negative consequences to making up numbers on your K-1. It is possible there are some that are not readily apparent. I try to be conservative and compliant with my tax reporting.