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the 1099-B does not report your trading gains, it reports your gross proceeds.

This particular brokerage also lists purchases on its consolidated 1099, and the total of those purchases is also way out of line with my records.

I have prepared two different statements with GainsKeeper. One statement uses the OFX data downloaded from the brokerage. The second uses data from the brokerage's transaction history section which was downloaded and manually imported into Gainskeeper. The former gives the same result as the 1099; the latter gives the same result as my records. Comparing my 2004 ending balance to my 2005 ending balance and adjusting for deposits, withdrawals, interest, dividends, etc., the latter appears to be correct. In short, I get different results depending on which source of broker data I use.

The IRS computers will match up the 1099B with your return and see a discrepancy. Then they'll add the extra sale proceeds to your schedule D - as a short term gain - and send you a bill for the additional taxes, interest, and penalty due.

At that point, you'll need to tell the IRS why and where the 1099B is wrong.

How do I prove which set of records is correct and which is in error?
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