1099-B on individual stocks and wash sale reporting

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  • #2285
    Sasha
    Participant

    Hello,

    I’ve always done our taxes on paper due to our simple situation. However, thanks to the changes on the forms, I wonder if I’ll have to start using some software/website to do our taxes going forward. I would like to report 2018 taxes on paper again as I need time to research and get comfortable before I using other means to do our taxes… I have a question on how to handle reporting when a wash sale is shown on 1099-B. I’d love to handle this in the least painful but legitimate way. So…

    When moving from Capital One to Schwab in 2018, fractional shares of 15 stocks were sold by Capital One (by using FIFO), two of which got slapped with ‘wash sale’ rule (total of THREE dollars).
    Our 1099-B says “Report on Form 8949, Part II with Box D checked. Basis is provided to the IRS.” All covered tax lots (thank goodness). Questions:

    1. Can I report the totals of proceeds/cost basis/gains of all 15 securities on Schedule D? I’m afraid not because of the wash sale involvement.
    2. If the answer is negative to the above, can I report the totals of the 13 securities on Line 8a of Schedule D and then report the affected 2 securities on Form 8949, Part II, D box (checked)?
    – The amount is so trivial: $3 for wash sale, $0 gain/loss and therefore I was hoping I could avoid Form 8949 in this case, but I wish to confirm my understanding that this is how it should be done.

    Thank you.

    PS.I haven’t read instructions on Schedules 1-6 yet, but perhaps you can give me a hint where the following items should be reported:
    – Taxable state refund;
    – Other Income (got a bank bonus/promo in 2018);
    – Early CD withdrawal penalty.

    #2292
    Kaye Thomas
    Moderator

    The following is from page 3 of the instructions for Form 8949:

    Form 8949 isn’t required for certain transactions. You may be able to aggregate those transactions and report them directly on either line 1a (for short-term transactions) or line 8a (for long-term transactions) of Schedule D. This option applies only to transactions (other than sales of collectibles) for which:
    • You received a Form 1099-B (or substitute statement) that shows basis was reported to the IRS and doesn’t show any adjustments in box 1f or 1g;
    • The Ordinary box in box 2 isn’t checked; and
    • You don’t need to make any adjustments to the basis or type of gain or (loss) reported on Form 1099-B (or substitute statement), or to your gain or (loss).

    This confirms that you are not allowed to report the wash sale transactions directly on Schedule D, but allows you to report the other thirteen transactions directly on Schedule D.

    You’ll find lines for the other items you mention on Schedule 1.

    • This reply was modified 2 years, 7 months ago by Kaye Thomas.
    #2294
    kaneohe
    Participant

    ……….Other income and Adjustments to Income………I’m more used to bank bonuses being reported as interest, however……….so check to see how it is reported. If it is misc income then you could use Sch 1.

    Kaye…….does the IRS only care about totals or might it be helpful
    (or not) to help them figure out where the #s come from?

    A possible alternative to the #2 answer is to have 2 lines for line 8a)………one would be the sum of all securities as shown on the 1099B so IRS can match that number w/ the 1099B and then a 2nd line that subtracts out the sum of the 2 wash sales.
    Then do the 2 wash sales on the 8949 and bring the total back to Sch D
    line 8b. That way neither you nor IRS has to deal with w/ 13 separate transactions. It would be helpful if the wash sale lines are labeled as such so IRS folks could figure out what you are doing.

    I believe a similar approach is sometimes recommended e.g. if you have aa 1099-INT that is not all yours. You enter the full amount on one line and then subtract the nominee interest on another line. That helps others trying to figure out where (at least) some of the numbers come from.

    #2295
    Kaye Thomas
    Moderator

    When the IRS gives explicit instructions how to report an item, it’s best to follow those instructions. You don’t have to think about how to explain things more clearly: they’ve programmed their computers to process the return properly if you follow their instructions. The right thing to do here is aggregate the 13 “clean” transactions and report that number directly on Schedule D, and list the two wash sales on Form 8949.

    #2296
    Sasha
    Participant

    Thank you, Thomas and Kaneohe, for your replies and discussion. It was very helpful.

    In regards to the bank bonus/promotion, I haven’t received any form from the banks and I’m not positive if I’ll ever will because it’s less than $300. Schwab gave $100 for opening a checking account and another bank gave $200 (that account has already been closed). When I earned such bonus/promotion $$ in the past, but didn’t get any paperwork from the bank, I reported them on Line 21 of the old 1040 and wrote “bank promo” on the dotted line. I thought it was appropriate, no?

    Thank you for the helpful answers.

    #2297
    kaneohe
    Participant

    Well, I had to go check my old paperwork to see if I was going senile. I would have sworn I always get a 1099-INT for the bank promos. I just checked the most recent one from 2017……..there is a 1099-INT for the promotion (basically 0% interest otherwise) and the monthly statement shows it as interest also. This particular one was $350 but I’m pretty sure I’ve had others in the even smaller but always got a 1099-INT. Curious that yours is different…….and for multiple sources.

    Your line 21 sounds ok to me. I doubt that IRS would turn down $$ they didn’t expect.

    • This reply was modified 2 years, 7 months ago by kaneohe.
    #2306
    Sasha
    Participant

    Kaneobe,
    I know that companies are not required to issue 1099-Misc if it’s less than $300, so my reasoning goes that the same applies to the promos from the bank. I report just in case the company told the IRS, but not me. I rather pay a few dollars extra in taxes than go through the pain of amending taxes and paying penalties.

    Isn’t Feb.15 the deadline to send out 1099’s? So, if I don’t get a letter next week, I’m sure i’ll never get it. I’ll report the $300 total of promos anyway.

    Thanks

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