1099B Reporting of Call and Put Option Losses

[DANMAN3]

Fidelity reports the loss on call and put options in the proceeds column on Form 1099B. This negative number is creating an error in Turbo Tax and keeps me from filing. Fidelity has reported it like this in the past and there weren't any problems with Turbo Tax. If I try and work around it, the tax return proceeds and basis will not agree with the 1099B numbers. Any suggestions?

[DavidD66 · Accepted solution]

The IRS no longer allows for the reporting of proceeds on a 1099-B to be negative.  If your broker has reported your proceeds as a negative, you can contact them and ask them issue you a corrected 1099-B.  If you downloaded your 1099-B, you can input manually.  If you have a lot of transactions, you can report sales section totals.  After entering your sales section totals you can upload a copy of your Form 1099-B with the trade details, so you won't need to worry about your input matching the IRS records.  

[fanfare]

search the forum here. you will find a big brouhaha over this issue.

[SamwiseSmeagol]

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/1099-b-doesn-t-suppor...

but there's 5 or 6 others

[DANMAN3]

I deleted the import and entered everything manually. I worked around the issue by including all option transactions with other sales and reported them as a summary total on line 1a, Schedule D. I had a few wash sales which had to be listed individually. This way the totals shown on Schedule D will agree with the totals on 1099B. 

[dzzz]

I am not sure why you say that the IRS is not accepting negative numbers for proceeds.  Their own instructions indicate that negative numbers can and should be entered where appropriate.  I spoke at length to TD Ameritrade today and this clearly seems to be a Turbotax problem since the brokers are reporting the negative number in compliance with IRS instructions.  It is unfathomable that TT does not fix the problem.  Also, there seems to be no way to even contact TT on the phone to discuss the problem.  Doesn't anyone know of an alternative product that works?

[Anonymous]

If you read through the Schedule D instructions for 2020 you will see that TT is right here.  negative numbers can be put in many fields but not proceeds.  The IRS has issued specific instructions that negative numbers in those fields will result in rejected tax returns. 

Sometimes TT is able to lobby at the IRS to change these parameters so it could get resolved before the end of tax season or they could possibly program it so that it automatically adjusts somehow but the issue truly is an IRS one in the end. 

[fanfare]

the reporting requirements for your broker are not the same as the reporting requirements for you the investor.

Maybe that 1099-B instructions for broker needs to be updated.

[yooperg]

TT 2022 desktop allows negative proceeds, like is reported on my e*Trade 1099B. (For covered call options). However, it does not allow these to be summarized to put on Schd D line 1a. If you summarize them in the step by step input, it puts them on form 8949. I think this perhaps is because in past years IRS did not allow negative numbers on Scd D line 1a for e-filing. Not sure if the IRS changed this for 2022, but TT didn't. At least you can report a negative proceeds on form 8949.