IB 1099 and futures commissions

[svtrader]

Quote from def:

I'll try to find out the reasoning. Pardon my ignorance on this issue but if all the information is on the sheet, what is the fuss? I imagine some funds and/or people prefer to have the split out.

def, thanks for the prompt follow-up.

Now to answer what the fuss is all about: Reporting the commission paid on line 4 as additional information is fine, so long as line 1/2 report the ACTUAL NET gain/loss after subtracting/adding commission (as appropriate).

This not only makes it simple for customers to do their taxes, but more importantly it avoids potential questions/audits from the IRS.

 

[parttimer]

IB seems to have made no changes regarding this issue for the tax year 2004. It is still reporting the commissions paid seperately on line 4 of 1099 instead of incorporating them into net gains/losses. This makes reporting of the commissions in form 6781 impossible.

Has anybody found a way about how to report the comissions paid to IB in his tax return?

parttimer

Quote from svtrader:

I started this thread to draw attention to the fact that specifically for futures, IB reports net gains/losses on 1099 without factoring in commissions, which you then have to subtract from gains or add to losses.

My point was that when the customer reports a net gain/loss to the IRS that DOESN'T match what's reported by IB, that needlessly raises a red flag and may trigger an audit.

What I'd like (and I'm sure the vast majority of IB futures traders would too), is that IB fix their software so that futures gains/losses are reported NET after commissions. Of course it's too late for 2003, but would be terrific if IB made this change for 2004 reporting.

This thread is NOT about getting advice from ET members on tax reporting. It's simply to request IB that they start reporting futures gains/losses on 1099 (net AFTER commissions) like the other brokers do.

 

[mrpace]

Great question. Still no clear answer, unfortunately (and another year goes by).....

Anyone?

 

[range]

Quote from parttimer:

IB seems to have made no changes regarding this issue for the tax year 2004. It is still reporting the commissions paid seperately on line 4 of 1099 instead of incorporating them into net gains/losses. This makes reporting of the commissions in form 6781 impossible.

Has anybody found a way about how to report the comissions paid to IB in his tax return?

parttimer

I will report the net gain/loss (subtracting line 4 from line 1) on Form 6781. Also, I will asterisk the amount and add a sentence stating what I did. No big deal.

 

[def]

I'm not sure of the reasoning of how we do it but I'm told commissions and net proceeds are reported on the 1099 just as the IRS specifies._ A simple subtraction produces the results needed.

 

[SethArb]

any other ET posters here who have traded futures
with IB since 2000 ?

something about an old 1099 substitute composite
futures from 2001 is puzzling me

( note to DEF )
... I will probably ask around tomm.
or by the end of the week on this or contact
banking again if needed .

 

[eparrot]

It's that time of year again. IB appears to be doing the same thing for 2005 as in previous years. While it appears that most other brokers DO include the commissions in their net profit/loss on a regular 1099B, which is the correct way to do it, I can find no instructions that would say that IB should or shouldn't be doing it in a substitute 1099 B. At the very least it creates more potential for filling out tax forms incorrectly and possibly triggering audits. And I would say that labelling Box 2 "Aggregate Profit/Loss" without including commissions is inaccurate, although this may be an IRS designation, not an IB one.

That said, I doubt that the substitute 1099 B triggers an audit the same way the regular one does, given its different format. If we assume that IB is correct in saying that this is the way a substitute 1099B is supposed to be filled out, then I suspect the IRS will handle the audit-checking correctly. I guess I will find out. I do my own taxes, and I don't feel like paying someone $100 just to tell me to put the info on Form 6787, which is undoubtedly what you have to do.

Therefore, I plan to simply put the net amount (aggregate profit in Box 2 minus commissions in Box 4) on Line 1 of Form 6787. If Turbotax will let me, I'll put a note indicating how I derived it, but otherwise I'll just submit it like that.