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Hi,

Last year I have sold some stocks through my German brokerage in a transaction that was denominated in Euro currency.

For myself I have computed the USD cost basis and sales prices for each such sale using the exchange rates (for purchase date and sales date respectively) from the Federal Reserve website.

My German broker supplied me with 1099-B forms that showed slightly different sales prices, presumably because they used a different source for the currency rate. They did not report the cost basis. I don't know which source my broker used for the exchange rate, so I can't get a comparable exchange rate for the purchase date.

Here's a (fictitious) example of one transaction:
- I compute the sales price to $4000 and the cost basis to $3000 using the Federal Reserve exchange rates.
- My 1099-B shows a sales price of $3950 and no cost basis is reported

I'm assuming that I should treat all such transactions the same way for a given tax year (and perhaps even across multiple tax years).

I see three possible ways to report this:

1. Report the sales price as $3950 and the cost basis as $3000 for a cap gain of $950.

2. Report the sales price as $3950 and the cost basis as $2950 for a cap gain of $1000, which is what I calculated for myself.

3. If either of the above method is fine and it's okay to use different methods in different years, run the numbers across all stocks sales for method #1 and method #2 and pick the method that gives me the smallest gain / largest loss. (Sounds a bit fishy, but if it's permissible, I would do it).

How should I proceed on this?

Thanks so much for and advice,
Bernhard
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If all of the 1099B information is slightly less than your calculations, I would suspect that your broker is deducting the commission and any other selling costs from the sales proceeds. That is the most common way brokers report their 1099B information.

If some are higher and some are lower, then I'd suspect exchange rates.

--Peter
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If all of the 1099B information is slightly less than your calculations, I would suspect that your broker is deducting the commission and any other selling costs from the sales proceeds. That is the most common way brokers report their 1099B information.

If some are higher and some are lower, then I'd suspect exchange rates


Hi Peter,

It's not due to commissions, because the 1099s all state that the sales price is less commissions. Furthermore I applied commissions as well in my calculations (subtracting them from the sales proceeds and adding them to the purchase price).

And most important: some sales prices indeed are higher and some are lower, that's why I was suspecting exchange rates as well.

So - going with the assumption that this is due to exchange rates - which of the methods I suggested (or perhaps a completely different) one, do you suggest that I use?

Thank you & best regards,
Bernhard
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Last year I have sold some stocks through my German brokerage in a transaction that was denominated in Euro currency.

For myself I have computed the USD cost basis and sales prices for each such sale using the exchange rates (for purchase date and sales date respectively) from the Federal Reserve website.

My German broker supplied me with 1099-B forms


I wonder how they do that. I have a similar (but not identical) situation where I have a Swiss annuity that pays me something annually. It is denominated in Swiss francs.

It is a Swiss insurance company, not a brokerage. I really wish they would send me a 1099-R form each year, whether they send one to the IRS or not. But they do not. So I have to write them each year to get the required information, look up the value of the Swiss franc on the payment date, figure out what part of the payment is return of principle and what part is interest, and put that on the miscellaneous income line on the 1040 form. I cannot get TaxAct to let me enter it all into a blank 1099-R form because I do not have the Swiss insurance company's taxpayer ID number (since they do not have one).
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I cannot get TaxAct to let me enter it all into a blank 1099-R form because I do not have the Swiss insurance company's taxpayer ID number (since they do not have one).

Just a thought, since I don't use TaxAct... Will it let you use an obviously bogus EIN such as 00-0000000 or 99-9999999 to create a dummy 1099-R?

Ira
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Just a thought, since I don't use TaxAct... Will it let you use an obviously bogus EIN such as 00-0000000 or 99-9999999 to create a dummy 1099-R?

It will. I don't know, however, whether this would be a bar to e-file.

Phil
Rule Your Retirement Home Fool
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So - going with the assumption that this is due to exchange rates - which of the methods I suggested (or perhaps a completely different) one, do you suggest that I use?

Hmmm.

My working assumption is that brokers know more about 1099B reporting than I do. They prepare 10s or 100s of thousands of them each year. I prepare exactly none. (I use a lot of them for preparing returns, but don't prepare any myself.) So I'm rather hesitant to say they are wrong. That doesn't mean they aren't wrong, but I'd need to know a lot more about the correct way to report transactions denominated in foreign currencies before trying to suggest changes to their 1099B.

However, if I were to want to report different amounts than were on the 1099B, the correct way to do that is to report the 1099B numbers on Form 8949 (where each transaction is initially reported), report your calculated cost basis, and than use one of the adjustment codes to adjust the sale price to your calculated amount.

--Peter
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Just a thought, since I don't use TaxAct... Will it let you use an obviously bogus EIN such as 00-0000000 or 99-9999999 to create a dummy 1099-R?

I do not know, and I have to reboot my machine to Windows to find out.
But it is a really great idea if they let me.
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Just a thought, since I don't use TaxAct... Will it let you use an obviously bogus EIN such as 00-0000000 or 99-9999999 to create a dummy 1099-R?

It will. I don't know, however, whether this would be a bar to e-file.


I am going to have to finish up filing, so I will try it. If it will not let me e-file, I will just put the interest part of the payout on line 21 of my 1040.
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However, if I were to want to report different amounts than were on the 1099B, the correct way to do that is to report the 1099B numbers on Form 8949 (where each transaction is initially reported), report your calculated cost basis, and than use one of the adjustment codes to adjust the sale price to your calculated amount.

Hi Peter,

Thank you so much for your response, I appreciate it a lot.

Just to clarify: The German broker did not report the cost basis on the 1099-B, otherwise I would have just gone with their number.

And I agree with you that they aren't "wrong": They are just using a different data source for the exchange rate than I do.

So I am not reporting any different amount that was on the 1099-B, I am just trying to come up with the "correct" (or at least suitable) amount for the cost basis, which is NOT reported on the 1099-B.

I'm not sure, if this clarification changes your recommendation, meaning that it might make sense to report the sales price from the 1099-B and just provide an appropriate cost basis.

Thanks & best regards,
Bernhard
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