Hi all!
I recently sold some mutual funds through my brokerage. They made two mistakes:
1) They sold the oldest lot instead of the six newest ones as requested.
2) They reported the average cost basis instead of the actual cost bases.
This resulted in a huge capital gain instead of a slight loss.
They are willing to fix (1) for me but not (2). The problem is if they fix only (1), then part of the gain will become short-term, which is even worse. But fixing (1) might make it easier for me to report my own cost basis.
The question is: if my brokerage reports the average basis, can I still report the correct basis? I have kept detailed records of all lots, and have not made any sales using average basis before (which would prevent me from changing to actual basis, per IRS). These are all covered shares.
In general, I know I can fill out form 8949 with adjustment code B (incorrect basis), but I want to confirm if this can be done here. In particular, the IRS has rules about making the average basis election with my brokerage and when I can revoke it. Outside of that revocation period, the brokerage is required to use average basis. So perhaps the real question is, does this rule apply to me also, or is it only there to make record-keeping easier for brokerages?
Thanks!
