You seem to be right, but once again I repeat myself, you report only Box 11 in taxes and if it makes sense why bother.
Is my 1099-B incorrect?
- Thread starter NumberSix
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Let's recognize that we have two issues:
Issue #1, raised by me: "Is the broker's 1099-B correct for my account?"
Issue #2, raised by gkishot: "Does issue #1 matter?"
I don't yet have anything to add on issue #1, but let me address issue #2. gkishot suggests that the answer to issue #2 is NO, since issue #1 doesn't matter, since Box 11 is the only thing relevant to IRS.
But my answer is that Box 11 is USUALLY the only box, on a 1099-B, that matters to IRS; but there are exceptions to that general rule, and when those exceptions operate, Box 8 matters, and Box 10 matters, and if those boxes are wrong, then maybe they can trigger an audit. If, for example, the taxpayer has made a "mixed straddle election", then any futures contract, if part of what is called an "identified mixed straddle", is NOT subject to the usual MTM accounting for the same taxpayer's other futures contracts. This is one of the special situations where Box 8 and Box 10 really do matter, because, for some or all futures contracts traded by the taxpayer, it is realized P/L that matters, not MTM P/L.
I hope this post adds clarification.
Whatever broker reported does not matter much as its in your right to agree or disagree with his reporting. Its your filing with the IRS that counts if you want to conduct your own accounting and prove it to the IRS with detailed records. Arguing with your broker about his mistakes won't do any good and it will lead you nowhere. For example, unlike yours, in my case box 11 shows a huge gain even though I had a losing year. But fortunately I found a mistake in brokers trade summary and I am confident I can prove to the IRS that brokers 1256 form is wrong and one position was not priced to market correctly. I pointed this mistake to the broker but I doubt they are going to change it. I don't expect them to do so and I am going to report my number.
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I don't want to risk the relationship with the broker, by naming the broker. Sorry.
Since the 1099-B is what the broker reports to the IRS, would it not be prudent to just go along and not worry about Box 10? If you file a return in which your Box 11 shows a loss, but your broker shows a gain, isn't that opening up a can of worms?
It will all flesh out in the end when you finally close that trade, unless you need to use it for tax-loss harvesting for 2022. And you spoke of choosing mixed-straddle election on that form, I forget the number. 6781 or something? That has a huge impact on your tax implications for forward or backward- tax loss carry. That election is VOLUNTARY. You don't HAVE to choose it.
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I disagree with Overnight. I believe it would not be at all prudent to go along with an incorrect 1099-B. I think it would be prudent, #1, to make certain that the 1099 is incorrect, and then, #2, to demand that the broker correct its bad 1099. My purpose, in this thread, is to achieve #1.
I do, however, agree with Overnight that it would not be prudent to file a return conflicting with the broker's 1099. We differ in that his approach is to adjust his return to match the broker's bad 1099, while my approach is that the broker should correct its bad 1099, so that a correct return will match it and avoid IRS trouble.
I also disagree with Overnight's view that it will all flesh out in the end, when the open position is eventually closed. I believe his approach can result, for example, in a very large tax overpayment in one year, and a very large tax underpayment in another year. I think that IRS could find this totally unacceptable, and inflict real pain, rather than sit back, relax, and say, it is OK, dude, it'll all balance out in the long run.
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.
Your broker does not care about your IRS trouble. Something to keep in mind. Just use your broker's December statement to show IRS your open positions at the end of the year. My understanding is that you just want to move amount from Box 8 to Box 10.
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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.
I think the question will probably be too obscure to get an answer this way, but I think it is worth a try, so I do plan to try it, and thank you for this suggestion.