1099 B with 8949 Box F is not allowing Stock cost Basis to be entered on worthless stock

[gattaca]

1. 2025 TurboTax Home / Business
2. Had a stock hit Chapter 11 mid year. 
3. Brokerage's summary printout shows NO 1099-B activity and Worthless stock was "not reported" 
4. Brokerage's supplemental notes instruct owners of the worthless stock to "Report on Form 8949, Part II, and check box F"  "F" means there is no 1099-B issued and it's not a Digital asset. 
5. On the brokerage's supplemental page, there is $0 cost basis, the quantity of shares etc. 
6. So my run at this I try to complete a 1099-B and per TT instructions so I leave the cost basis blank on the 1099-B (Box 1e) but the field below I check that the "Cost Basis is incorrect or missing on my 1099-B" which by being an 8949 Type "F" is not a real issued 1099-B - only figures from the brokerage's supplemental notes and pages. 
7. Then I think TT asks a series of ? and one of them is "Is this stock worthless?" I check YES. 
8. TT then confirms the cost basis and asks if I want to change the cost basis on a subsequent prompt.  
9. I select YES.  Then TT allows me to enter my actual Cost Basis for the worthless stock.   (This is where I think it is broken.) 
10. However, TT does not appear to insert the cost basis anywhere on Form 8949, Section 2 when "F" is selected.   I think this is where TT may be broken?  The cost basis should included on 8949. 
11. The only 2 ways I can make the cost basis (loss) appear on 8949 is to check Box E (which means it was reported to the IRS on issued 1099-B), which is NOT what the brokerage's instructions are: "use 8949 Box F."  OR if I enter the costs basis on the original 1099-B box 1e line vs leaving it blank and then letting TT ask me if I want to update the cost basis a screen or so later.    Both routes will put the loss on the 8949.  
12. Finally, I hit forms and "overrode" the 8949 cost basis.  Then, TT flags the form as ! RED unhappy and flags the entire return and pages as "Needs Attention". 

I think the workflow is wrong.  Even if I'm using 8949, Box F, TT should accept the stock's basis on that 2nd question and show that as a loss on 8949, Section II.  All I get is $0.00 for the sales, $0.00 for costs.  

Please confirm this is a bug and how to correct it or work around or is there a fix OTW?  Thank You.  G. Mobley

[DianeW777 · Accepted solution]

The entry below may resolve your current experience. You can report it in the year they are deemed to be completely worthless. This usually happens when a company stops doing business or files bankruptcy.  You should be prepared with your proof and retain it in your tax file.

The sales price would be zero and the cost basis would be what you actually paid for the stock and December 31st as the date of sale

 To enter worthless stock as investment sales: (You should use the description as 'Worthless'.)

1. Open (continue) your return in TurboTax.
2. In the search box, search for investment sales then click the "Jump to" link in the search results.
3. Answer Yes to the question Did you sell any investments?
   • If you land on the Here's the investment sales we have so far screen, click Add More Sales.
4. Answer No to the 1099-B question and select 'Other' as the Investment Type, Name is Worthless XXX
5. On the next screen, select the type of sale you had (stock, second home, collectible, land etc.) and click Continue.
6. Continue following the onscreen instructions to enter the sale. 

Helpful Information:

• IRS FAQ -Worthless Security

Please update here if you have additional questions after your use these steps. Once completed you can review Forms.

[gattaca]

Hi Diane, 

You rock!  Thank You! 

The above solution solves the problem I outlined above.  It produces an 8949 form with Box F checked and the cost basis (loss) shown without me overriding and TT flagging the 8949.  In TT this "Other" shows up as a I think some generic 1099-B or at least that's how it's labeled. 

Thank You for this insight!!! 

I believe TT's "Step by Step" leads you almost down this path but then does not correctly handle the type "F" scenario when checking the "Worthless stock box" + entering the cost basis in the subsequent questions. 

Maybe this scenario needs to be in the TT help for "Worthless stock"  Why? Because using the default "issued" 1099-B path when it really was not and is classified as "F" vs the "Other" does not yield the correct final result. 

Have a great evening!  G. Mobley