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I'm starting my tax form prep, perhaps jumping the gun since I haven't received any 1099s yet. But I do have all the trade confirmations.

My question is this, and it's tactical only. I often buy shares of stock in order sizes that TDA winds up completing in more than one lot. When I sell these positions to clear them, the single sell order also often gets executed in multiple lots. And, of course the buy and sell lots don't line up except in their total.

Is it acceptable to the IRS (in the sense that it'll cause minimal confusion) to aggregate each of the lots into the single buy/sell order in which they were entered, or must I enumerate each lot as the actual confirmations delineate?

Also, can I use stock symbols, or should I use the company name?

Thanks

Eric Hines
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Is it acceptable to the IRS (in the sense that it'll cause minimal confusion) to aggregate each of the lots into the single buy/sell order in which they were entered, or must I enumerate each lot as the actual confirmations delineate?

Also, can I use stock symbols, or should I use the company name?


Do at least one entry for each sale shown on the 1099-B. If you purchased what was sold on more than one purchase date you can combine purchases and use "various" for the date. You must still separate between long- and short-term, though.

I use symbols.

Phil
Rule Your Retirement Home Fool
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For me, it depends on the volume of transactions. The more transactions there are, the more likely I am to group them together.

While the purists would list each sell separately if they are shown separately on the 1099-B, I'll routinely group those by day. So if your sell order got split into multiple lots but all sold on the same day, I'll enter them as a single item. But if it got split into two days, then I'd split them up on the tax return.

Frankly, I don't get too worked up about it. The key is to make the total of the sales match the total of the 1099-Bs. And now we also need to make sure that all reported purchases match up to the 1099-Bs as well. If those two totals match, the IRS is highly unlikely to send the dreaded (but often quite wrong) matching notice, a CP2000.

And in any event, even in an audit, if your numbers are correct, there's nothing for the auditor to adjust.

--Peter
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Do at least one entry for each sale shown on the 1099-B. If you purchased what was sold on more than one purchase date you can combine purchases and use "various" for the date. You must still separate between long- and short-term, though.

With one exception, all the lots of a sell order were executed on the same day, and all the lots of a buy order were executed on the same day (I may have a wash sale on one equity, but the 1099 should make that clear, too). It sounds like, then, that you're anticipating the 1099 to aggregate the various lots of a single buy/sell order into one line on the 1099.

The exception is some several-year-old stock shares acquired through my company's ESPP which were sold via a single sell order this year. The acquisition dates of these shares are unknown to my broker, as when I left that company, I transferred the shares from the company's ESPP plan manager to my broker. If I use an acquisition date of "various," how will I justify a claim of long-term for the cap gain? Is this just the same record-keeping drill that I'd have to do (and have done) to justify claims of explicit acquisition dates?

I use symbols.

I asked because the last time I used symbols, I got a letter from the IRS saying I'd under-reported my stock transactions, compared to the 1099s they'd received, and would I please send them a large (compared to my coin purse) chunk of money, plus interest and penalties? That was straightforwardly corrected (that record-keeping, again) by explaining where on the tax forms I'd sent them they could find my stock transactions and how they lined up with the 1099s we'd both received. But I don't need those heart-stopper letters.

Eric Hines
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...even in an audit, if your numbers are correct, there's nothing for the auditor to adjust.

Understand; I'd just as soon do the work now, though, that obviates the audit, rather than sitting through one. My wife and I both have done that, and even though our numbers were correct and we had no adjustments, we had other things on which we might have spent the time, effort, and tension. [g]

Eric Hines
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With one exception, all the lots of a sell order were executed on the same day, and all the lots of a buy order were executed on the same day (I may have a wash sale on one equity, but the 1099 should make that clear, too).

How? With relatively few exceptions, 1099-B's don't report gain/loss. Don't confuse the "supplemental" information included with your 1099 package with what gets sent to the IRS and, more importantly, what would constitute proof in an audit.

It sounds like, then, that you're anticipating the 1099 to aggregate the various lots of a single buy/sell order into one line on the 1099.

Sell, yes. Buy, see above.

The exception is some several-year-old stock shares acquired through my company's ESPP which were sold via a single sell order this year. The acquisition dates of these shares are unknown to my broker, as when I left that company, I transferred the shares from the company's ESPP plan manager to my broker. If I use an acquisition date of "various," how will I justify a claim of long-term for the cap gain? Is this just the same record-keeping drill that I'd have to do (and have done) to justify claims of explicit acquisition dates?

Right.

When basis reporting on the 1099-B became future law I warned that I personally wouldn't trust brokers to get it right and urged people not to change anything in their recordkeeping. That opinion hasn't changed.

I use symbols.

I asked because the last time I used symbols, I got a letter from the IRS saying I'd under-reported my stock transactions, compared to the 1099s they'd received, and would I please send them a large (compared to my coin purse) chunk of money, plus interest and penalties?


If you still have the records of that exchange I think you'll find that symbol reporting had nothing to do with the problem. As Peter noted, what the IRS really cares about is the totals.

Phil
Rule Your Retirement Home Fool
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I may have a wash sale on one equity

How? With relatively few exceptions, 1099-B's don't report gain/loss.

But there are the buy/sell dates and the net proceeds. And my stock selection paradigm had me buy a stock I'd just sold 26 days earlier. However, "on further review" (after I'd made the above remark), it turns out both trades were profitable, so the question is moot.

Eric Hines
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But there are the buy/sell dates and the net proceeds.

I think you missed my point. 1099-B purchase date, basis and gain/loss reporting only started in 2011, and is required only for securities acquired on or after 1/1/2011. And not even all of those.

Phil
Rule Your Retirement Home Fool
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Do at least one entry for each sale shown on the 1099-B.

I had a sale in 2012 that was a single transaction, nicely cleared in one lot. But my broker reported it as two separate transactions on the 1099-B, apparently because there were different acquisition dates. The acquisition dates were after the start of the new law, so the basis (which the broker got right) is reported to the IRS.

My understanding of Phil's advice quoted above is that I should report this as two line items on Form 8949, matching the two lines the broker reported, because this is less likely to confuse the IRS computers and cause them to ask questions.

Got it. I can do that, and it makes no difference to the totals. I might be annoyed if I were an active trader, but no big deal for the quantity of trades I had in 2012.

Patzer
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I found out the hard way that you must list everything just like they do on the 1099. not one share different! audits are a pain!
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