Negative proceeds reported on a 1099-B

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  • #14475

    I notice that 2 of my options wash sales, which I’m required to report individually, happen to (annoyingly) have negative proceeds and zero for the cost basis. This happened to me several years back for one option transaction, and my state rejected the State return when I attempted to file electronically. My solution was to just change the basis to a positive amount and report the proceeds as zero. This resulted in the identical loss, and the State return was then accepted electronically without issues.

    Can I save myself the trouble by just doing this again for 2020 for both the Federal and State. Will anyone care if I report the basis as positive and the proceeds as zero instead of reporting negative proceeds and basis as zero?

    Or should I first try filing both Federal and State with negative proceeds and then wait to see if the State gets rejected and then just re-file the State with positive basis and zero for proceeds like I did last time?

    Thanks, J.

    • This topic was modified 11 months, 1 week ago by jreality.
    Kaye Thomas

    The alternate version you used before is unlikely to provoke any inquiry, and if it did, a brief explanation should put the matter to rest. If this is what it takes to get your state return accepted, I would not see a problem, so long as you aren’t changing the tax result.

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