When does IB deliver it's tax forms online?

[Bob111]

doing my taxes by myself for at least 10 years i'm completely confused with 2011's 1099-B issued by IB
what are non covered securities? i have 4.5M in proceeds,but nothing in cost or other basis. how so?

what are covered securities and non covered securities? why short sales are reported separately?

how i calculate my PnL from all this? to be honest- i don't understand a single thing from this 1099-B statement.

 

[IB-AN]

Quote from Bob111:

doing my taxes by myself for at least 10 years i'm completely confused with 2011's 1099-B issued by IB
what are non covered securities? i have 4.5M in proceeds,but nothing in cost or other basis. how so?

what are covered securities and non covered securities? why short sales are reported separately?

how i calculate my PnL from all this? to be honest- i don't understand a single thing from this 1099-B statement.

Please understand, the changes to the Form 1099B originate from the IRS, not IB, as we are simply reporting information to you in the manner as prescribed by the IRS. What has taken place is as follows:

Starting with 2011 tax reporting, new legislation went into effect which requires brokers to report to both the customers and the IRS greater details relating to gains and losses on their securities transactions. Previously, only proceeds from securities sales were reported and this new requirement, originating from the Emergency Economic Stabilization Act of 2008, is intended to improve the accuracy of tax filings. Key aspects of the new legislation are as follows:

-The adjusted cost basis in addition to the sales proceeds of securities transactions will be reported;
-The holding period of disposed securities will be designated as either short-term or long-term;
-Transactions which result in a Wash Sale will be reported along with adjustments to cost basis and holding periods;
-Short sales will be reported in the year the position is closed as opposed to opened.

The reporting changes will phased in by class of security over the next 3 years which is why the terms 'uncovered' and 'covered' are being used. For purposes of 2011 activity, only stocks (including domestic and foreign stocks, REITs, ADRs and certain ETFs) acquired after 1/1/2011 and subsequently sold are deemed 'covered' by the rules. Mutual funds and the remaining ETFs will be phased in starting 1/1/2012 and options, fixed income & other products after 1/1/2013.

If a security is 'covered' the cost basis, holding period and wash sale detail will be reported; if 'uncovered' the same information as in the past (sales proceeds) will be reported. The effect is that one can now receive up to four 1099s: one for 'covered' transactions where the holding period is short-term; another for 'covered' transactions where the holding period is long-term; a third for 'covered' short sales; and a fourth for 'uncovered' transactions.

In addition, what was formerly known as the 'Gain/Loss Summary' intended to provide supporting details for Schedule D is now referred to as Form 8949 and this will be made available 3/1/2012.

It's important to note that these changes only impact what your broker is required to report to you and the IRS. It has no impact upon the manner in which you report your activity to the IRS.

 

[Bob111]

Please understand, the changes to the Form 1099B originate from the IRS, not IB, as we are simply reporting information to you in the manner as prescribed by the IRS. What has taken place is as follows:

you can say whatever...here is what i have today...copy of my 1099 goes to IRS from IB and me... what i have on it is 4.5M proceeds and nothing in basis. that's in non covered section. IRS then will assume that 4.5M are my profits and will assign appropriate taxes and penalties..all that because IB are unable to identify cost of basis of my QQQ,SPY and IWM trades ..trades,where i bought and sold all of thenm on very same day. somehow IB was able to calculate proceeds,but can't do same with basis. un fucking believable...i'm some sort of shit magnet,when it comes to IB?

 

[JackR]

Bob:

The 8949 worksheet will show both sides. You report as you need to. It is just like the old Schedule D worksheet. IB showed both sides whenever they could. But we adjusted to handle options against equities, etc.

I realize you've been a very happy, indeed thrilled IB customer for years (to read your posts about the TWS changes). So your IB-provided 8949 worksheet may make getting things done a little easier if all your trading was done at IB.

This IRS link may help -
http://www.irs.gov/newsroom/article/0,,id=254086,00.html

Jack

 

[Bob111]

I basically trade futures to which the 8949 doesn't apply. But I did sell a stock last year that I bought when the world was ending in 2008. I bought it via IB and sold it via IB. But it shows on my 1099 as an uncovered security. So I guess they only needed to track, for IRS 8949 purposes, the opening of a trade, starting this year.

Jack-your case is not a problem,cause it's a single case and rules from IRS on this one is very clear. my situation is totally different. i'm talking about trades of most liquid and common ETF's. trades that been opened and closed at same day. obviously on same account .how they ended up in no covered category in IB-i have no idea.

 

[IB-AN]

Quote from Bob111:

you can say whatever...here is what i have today...copy of my 1099 goes to IRS from IB and me... what i have on it is 4.5M proceeds and nothing in basis. that's in non covered section. IRS then will assume that 4.5M are my profits and will assign appropriate taxes and penalties..all that because IB are unable to identify cost of basis of my QQQ,SPY and IWM trades ..trades,where i bought and sold all of thenm on very same day. somehow IB was able to calculate proceeds,but can't do same with basis. un fucking believable...i'm some sort of shit magnet,when it comes to IB?

What you are likely seeing is the reporting method for transactions which the IRS classifies as 'uncovered' by the new rules (as they are either stocks acquired prior to 1/1/11 or another product). If the transaction is 'uncovered' then the broker does not require the cost basis. It's the same treatment as if those securities had been sold last year (i.e., only sales proceeds were reported on 1099). This has nothing to do with the broker's ability to identify the cost basis; it's simply how the IRS rules require reporting to take place.

It also has no bearing on your tax obligation as you will be required to independently supply the cost basis when you prepare your Schedule D. The IRS, just as in years past, will solely seek to match the gross proceeds you report with that as reported by your broker.

Please feel free to PM me if you'd like assistance.

 

[Bob111]

worksheet should make things a bit easier,but again-it's going to come from me. i can only hope, that IRS will accept that as a proof,cause on other hand-they will have 1099 from IB with zero in basis and 4.5M in proceeds. from this situation i'm pretty sure that there is will be some fight between me and IRS. i can almost guarantee you that.

 

[Hurricane]

Quote from Bob111:

IRS then will assume that 4.5M are my profits

Not true. Since cost basis for purchases before 1/1/11 and non-covered securities aren't reported, as in the past, the IRS won't be able to determine if your reported cost basis is accurate (unless they request supporting brokerage statements or do an audit). But it starts the process of providing information that needs to be reconciled between the cost basis reported to you and the cost basis that you report on Schedule D.

I agree it's a bit of a mess and I'm particularly concerned with which shares IB thinks I sold when I only sold a portion of my shares in a particular stock. But IB provides the details of all the transactions as a 1099 attachment and this is where you should start your research. For the transactions without a reported cost basis, find them in your own records and report them exactly as you have in the past.

Suggestion to IB - Have a Webinar on this topic for U.S. customers.

 

[Bob111]

Quote from IB-AN:

What you are likely seeing is the reporting method for transactions which the IRS classifies as 'uncovered' by the new rules (as they are either stocks acquired prior to 1/1/11 or another product). If the transaction is 'uncovered' then the broker does not require the cost basis. It's the same treatment as if those securities had been sold last year (i.e., only sales proceeds were reported on 1099). This has nothing to do with the broker's ability to identify the cost basis; it's simply how the IRS rules require reporting to take place.

It also has no bearing on your tax obligation as you will be required to independently supply the cost basis when you prepare your Schedule D. The IRS, just as in years past, will solely seek to match the gross proceeds you report with that as reported by your broker.

Please feel free to PM me if you'd like assistance.

once again-here is an example..IWM traded in and out all day long(not prior 1/1/11)

 

[IB-AN]

Quote from Bob111:

worksheet should make things a bit easier,but again-it's going to come from me. i can only hope, that IRS will accept that as a proof,cause on other hand-they will have 1099 from IB with zero in basis and 4.5M in proceeds. from this situation i'm pretty sure that there is will be some fight between me and IRS. i can almost guarantee you that.

The IRS always took the cost basis from individuals as evidence of the gain/loss and Gain/Loss worksheets were never supplied to the IRS (nor will the Form 8949). You supporting evidence in the event of an audit would be your activity statements.