Botched 1099-B cost-basis reporting: The List

Quote from gkishot:

Penson reports total disallowed wash sales loss for the year to IRS. To what security should I add total wash sale loss? To all my transactions next year?
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Your saying they just give ONE dollar figure for ALL your wash sales? They LUMP it all together???
makes your life a bit difficult because you then have to go figure it all out. which sales they were and what securities involved. Is there an easier way?? dunno

can't believe that.................. they HAVE to be more specific!
 
If you have a chain of wash sale losses, and never make a profit, you finally realize the loss when you stop trading that issue for more than 30 days. The last purchase, with its carried-forward adjusted basis, determines your final loss.

Just as a neat thing - If you took a loss on an issue on Jan 1,2011, traded the stock during 2011 such that every trade continued the wash sale chain (no gains), and finally sold the issue at a profit in 2012, you'd have a long-term capital gain. Not my rules, but the IRS'. However, if you did this type of trading, I don't think you should be a trader.

Jack
 
I noticed 3 cost basis errors on my Schwab 1099, the total of the errors is 7 cents in my favor. So if I used the broker numbers the IRS could come back and say I owe them 7 cents? lol

After looking again I notice these shares were purchased in 2009 and 2010, so the cost basis is not reported to the IRS. It even says so on the 1099 (they have the 'X' code in box 6). So looks like I'm all set on this. I should probably be safe to use my correct numbers (not broker numbers) and send it in...
 
Hi Robert,

My 1099-B from Interactive Brokers is showing three ETfs that I traded (short term basis) in 2011 ( KOL, XLU, PIN) as uncovered. The problem is TradeLog shows them as Covered and puts them under Part1 (Category A) of Form 8949. I have been trying to work with TradeLog support but after much back & forth have been unable to get a way to move these to Part 1 (Category B). Still trying to get a fix. This is causing a big adjustment line in Part 1 (Category A).

If you or anyone could suggest a way to fix this, it would be greatly appreciated.

Thanks & Regards
Anurag
 
Hi,

My 1099-B from Interactive Brokers is showing three ETfs that I traded (short term basis) in 2011 ( KOL, XLU, PIN) as uncovered. The problem is TradeLog shows them as Covered and puts them under Part1 (Category A) of Form 8949. I have been trying to work with TradeLog support but after much back & forth have been unable to get a way to move these to Part 1 (Category B) to match 1099-B. Still trying to get a fix. This is causing a big adjustment line in Part 1 (Category A).

If anyone could suggest a way to fix this, it would be greatly appreciated.

Thanks & Regards
 
We will reply to some of your posts soon with specific answers and help.

My new blog should shed further light on the problems in reconciling 1099s to trade accounting on Form 8949.

Mar 20 12 - IRS, why force taxpayers to reconcile securities-broker 1099-Bs to tax returns, when your rules are apples vs. oranges?
http://www.greencompany.com/blog/index.php?postid=141

Contrary to public perception, securities brokers’ cost-basis reporting on 1099-Bs rarely matches taxpayers’ net trading gain or loss generated from their trade accounting program. This is because the IRS gives brokers one set of rules for preparing 1099s and gives taxpayers an entirely different set of rules.

Why the difference? The IRS does not ask securities brokers to report net taxable gain or loss on 1099-Bs, but they require taxpayers to do that on the new Form 8949 for 2011 tax returns.

The apples and oranges in the rules are counterintuitive to taxpayers, causing great confusion and extension filings. Historically, the IRS led taxpayers to believe the idea of 1099s was to confirm a taxpayer’s income or loss and to provide a means for IRS computers to check up on taxpayer compliance. Sometimes, the IRS matches net income — one example is with Section 1256 contracts. And other times it reconciles with proceeds — such as with securities. But the new 2011 rules require brokers to report cost basis on 1099-Bs, too.

Some of the problem is due to phase-in and transition. Securities brokers report 2011 cost basis on stocks only. (A few brokers elected to report 2010 cost basis on 2011 1099-Bs, too, even though it wasn’t required.) In doing so, brokers’ systems left out wash-sale deferral cost basis from 2010. That means out of the gate, 1099-B 2011 wash sale reporting is incorrect. If 1099-Bs botch wash sales, how can cost-basis reporting be correct for 2011? It can’t. This issue may be better in 2012, when brokers report 2011 and 2012 cost basis.

.........Read the full blog at:
http://www.greencompany.com/blog/index.php?postid=141
 
IRS, please don’t require taxpayers to reconcile differences
The IRS caused this mess, so it should not force taxpayers to explain the line-by-line differences on Form 8949. We ask that the IRS simply accept trade accounting as is, and only match proceeds on securities as it has done in prior years. Don’t try to match the unmatchable cost basis for 2011. If the IRS doesn’t waive matching, it will send hundreds of thousands of nasty tax notices to taxpayers. That will lead to great expense and very upset taxpayers. Perhaps, matching will get easier for 2012 tax returns, so we can reassess at that time.
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http://www.greencompany.com/blog/index.php?postid=141

yeah..i've been saying same thing in other thread about new reporting rules. the intentions are good,but what a mess they created(as usual). good luck for them to figure out my return,but if there is an audit or any dispute over my return-i will be done with trading and reporting ANY taxes to irs. fuck it. just like that. i would rather just sit and do nothing,than wasting my time on this crap. simplify damn rules! current tax code is completely counterproductive..i've been saying this for years..
 
Abducens:

The Futures info is obtained from your Form 6781, lines 6 and 7. You normally enter it on the Sch D worksheet. It will eventually be part of lines 4 and 11 of Sch D.

Jack
 
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