IB 1099-B appears to have many errors

F

fbell50

This is the first year the IRS requires reporting the cost basis. I've found what appears to me to be three glaring errors in mine.

1) In my 2011 Tax Reporting Statement under the section "Covered Securities Short Sales with Short-Term Capital Gains/Losses" all the date of sales are set to the date of acquisition.
2) The buy date is missing on many lines. In the one entry I checked, shares for two different buy dates were combined.
3) There are many incorrect wash sales. For example, I bought some Amyris on 11/3/2011 and sold on 11/14/2011. I had no other trades in Amyris for all of 2011, much less within the 30 days before or after the sale, yet there is a wash sale disallowal.

I've opened tickets on each of these.
 
I can't figure out how they got the wash sale numbers either. Looks like on mine whenever a stock was traded more than once during the year, and at least one of the trades was a loss, they added some bogus numbers up.

I haven't looked at all of them (hundreds) but a quick scan found a trade in JANUARY on a stock for a small gain (only about $25), then another in AUGUST (the Summer "Crash"!) for about a $400 loss. Somehow this gives a Disallowed Wash Sale of $111??? And those are the only trades of that stock during the year.

Guess I'll just have to adjust all this crap to make it come out right. And I'll probably have to defend it all in a "letter audit"... :mad:
 
Same problem here. There should be no wash sale "disallowed" for that trade. They are ignoring that 30days have passed without
trading it--which would 'extinguish' that wash sale, so it would not
be disallowed.

I'm working with them on this as well. Hundreds or thousands of errors on my 1099 as well.





Quote from fbell50:

This is the first year the IRS requires reporting the cost basis. I've found what appears to me to be three glaring errors in mine.

1) In my 2011 Tax Reporting Statement under the section "Covered Securities Short Sales with Short-Term Capital Gains/Losses" all the date of sales are set to the date of acquisition.
2) The buy date is missing on many lines. In the one entry I checked, shares for two different buy dates were combined.
3) There are many incorrect wash sales. For example, I bought some Amyris on 11/3/2011 and sold on 11/14/2011. I had no other trades in Amyris for all of 2011, much less within the 30 days before or after the sale, yet there is a wash sale disallowal.

I've opened tickets on each of these.
More...
 

For example, I bought some Amyris on 11/3/2011 and sold on 11/14/2011. I had no other trades in Amyris for all of 2011, much less within the 30 days before or after the sale, yet there is a wash sale disallowal.
More...

I believe that it is possible that IB may be correct and you still actually may have a wash sale. Here's why:

If you bought the stock in multiple buys on 11/3/2011 then, I hate to say it, but I believe you may still have a wash sale on one (or more) of the lots depending on whether you sold above or below the prices of those lots. If you just bought ONE LOT on the 3rd, then you should not have any wash sales.

ADD: If you bought multiple lots on the same day, this doesn't mean it won't cause a wash sale when you sell. In other words, technically, when you sold the whole darned thing less than 2 weeks after you bought, you may have caused a wash sale on some of the lots, and instantly caused other lot(s) cost basis being adjusted to reflect that wash sale.

ADD: I actually had a trade where I bought an ETF in multiple lots and sold on the SAME DAY and it caused a wash-sale for some of the lots. (and that was the only day I traded the stock in a 60-plus day time frame) I think it may be correct that some of the lots had wash-sales. As long as your LOSING lots are bought within 30 days or less before your winning lots it can cause a wash sale even if all bought on the same day.

(although I do agree it is a silly that multiple buys on the same day can't be treated as one buy with an average cost)

If you waited until 31 days after your bought all your lots to sell, you wouldn't have to worry about this wash-sale nonsense.
 
Jreality, thanks for the explanation. I've learned a lot about wash sales this week and it doesn't even apply to me since I've took the mark-to-market election years ago.

I'm just trying to reconcile my results against the 1099B. The new reporting rules make it difficult. I reconcile against the trade confirmations to the penny but that doesn't seem to be good enough. My cpa wants to reconcile against the 1099B which is much tougher. There's not even a mention when the disallowed amount is reapplied in later trades (no minus wash amt for example).
 
No problem. Yeah, the wash sale rule is very confusing. It would be nice if multiple buys on same day could be treated as one big lot.

I'm not using MTM, but I still have way too many transactions to report. I'm gonna trade less this year. :-)

It seems to me that the blank acquisition dates should say "various" on the 1099, but I have them as well on mine. I just hope that those blank fields were properly reported to the IRS as "various".
 
Okay, I may have found what I believe to be a mistake in an IB worksheet (and the 1099 itself)

On the 8th of March I bought 20 shares of NEM

My actual total amount of cash paid was 1059.84 including $1 commish. On the 10th of March, I bought another 80 shares, with cash paid of 4116.20 (including 1$ commish) and then, the same day, I sold all 100 shares (on March 10th).

My actual total proceeds for the 100 shares was 5139 net of $1 commish.

It seems to me that IB should be reporting the first lot as having been sold for 1027.8 with resulting in a loss of 32.04 and then adding back the wash sale adjustment of 32.04 to the next lot's cost basis.

Instead they did two things differently than I would have expected:

1) they calculated the proceeds of the first lot by multipying the selling price by 20 and then subtracting the entire $1 commish from just that lot's proceeds. I would have expected them to simply multiply the entire proceeds [5139] received by 0.2 which would result in 1027.8 versus 1027.

2) For some reason they only disallowed 13.64, and then added that number back to the cost basis of the 1st lot itself instead of adding it to the cost basis of the next lot.

I'm confused! Where did they come up with 13.64 as the disallowed amount and why did they add that value back to the cost basis of the 1st lot? Again, it seems to me the disallowed loss on the 1st lot should be around $32 and that amount should be added to the NEXT LOT's cost basis. What is going on here?

This is what IB reported:
____________________________________________
20 sh NEWMONT MINING CORP-----------W--

3/8/2011 3/10/2011 1,027.00 1,073.48 13.64

80 sh NEWMONT MINING CORP

3/10/2011 3/10/2011 4,112.00 4,116.20
____________________________________________



This is what I would have expected to see:
_____________________________________________
20 sh NEWMONT MINING CORP----------W---

3/8/2011 3/10/2011 1,027.80 1,059.84 32.04

80 sh NEWMONT MINING CORP

3/10/2011 3/10/2011 4,111.2 4,148.24
______________________________________________

What is going on here? The end result is the same, which is an overall loss of $37.04, but I don't understand IB's methodology here. I'm not as concerned about issue number 1, which is the difference in how they calculated the lot proceeds, as much as I'm concerned about issue number 2, which is where they got 13.64 and why did they add it to the 1st lot's cost basis rather than the 2nd lot's.
 
FWIW, There was another stock (ONNN) in which I bought 50 shares, took a loss, and then bought back a 2nd lot of 50 shares, and then later sold. In that case, IB did what I expected, which was to disallow the entire loss of the 1st lot, and add that to the cost basis of the 2nd lot. I don't understand what was done in the case of NEM
 
I spent quite a lot of time sorting all of my sales transactions by security and comparing it to IB provided details. The problem I'm noticing is when I only sold a portion of my shares. For example, if I:

Bought 100 shares XYZ @ 10, then

Bought 100 shares XYZ @ 20, then

Sold 100 shares XYZ @ 15

How are they deciding what my basis was? Some brokers, like E-Trade, allow you to select which shares you are actually selling. But IB does not. In my example above, I might choose to sell the first lot and take the gain if it's long term or to offset capital losses in other transactions. Or I might choose to sell the second lot to take a loss to offset other gains. It's particularly a problem when IB reports my selling shares that on my records I sold in a prior year.

I can see how this will facilitate reporting in future years when all sold securities were purchased in 2011 or later. But for now, I'll need to analyze it security by security and report lots of adjustments on my return.
 
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