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I have received form 1099-B from my broker, and the total gross proceeds on 1099-B seem way out of line with the total obtained from my own records. The tax on the amount obtained from my records would be substantially less than the tax on the amount on 1099-B. To complicate matters, I have run my records through GainsKeeper and the results obtained from Gainskeeper agree with my calculations. I am meticulous about keeping records and I am starting to suspect my broker's 1099-B data is bogus. The question is, if I file and pay the lesser amount of tax based on my records which do not comport with 1099-B, will the IRS have a problem with this? How would I go about proving the accuracy of my records over the broker's records. There are almost 1100 transactions so checking the transactions manually would be daunting.

I suspect the two previous responders have missed the real issue here. You state that the tax on the amounts on 1099-B is way out of line with what you calculate the tax to be. However, the 1099-B does not report your trading gains, it reports your gross proceeds. You need to determine your gains, which it appears you have done. You need to report both the sales proceeds and the calculated gains. You'll only pay tax on the net gains. However, if the total sales proceeds (not gains) you report are less than those reported by the broker, you can be sure that you'll hear from the IRS.

Ira
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