I'd like to know about this one too. In fact Turbotax added my short term gains as class C on the form but doesn't explain or have a selection for that in the UI. Thanks.
If I have uncovered gains and don't have a record of the purchase, how do I declare cost?
In tax year 2011, new legislation was passed requiring brokers to report adjusted basis and whether any gain or loss on a sale is classified as short-term or long-term from the sale of "covered securities" on Form 1099-B. Prior to this time frame, it was hit or miss to get this level of detail from investment firms. Covered just distinguishes the investments that must include this detail from those that do not, noncovered. An investment is considered covered if it is:
Shares of corporate stock acquired on or after January 1, 2011.
Shares of stock in mutual funds and stock acquired in connection with a dividend reinvestment plan are generally not covered unless acquired after January 1, 2012.
Certain other types of securities (e.g., debt instruments and options) will be covered if acquired after January 1, 2014.
"Non-covered" securities are any securities purchased or acquired before the above effective dates. Transactions involving assets purchased and held prior to these effective dates can still be reported as they have been in the past, meaning that brokers may not provide detailed cost basis reporting to the IRS on the sales of "non-covered" securities. They may decide to report only your gross proceeds. For these situations, it is your responsibility to report the proper cost basis on non-covered securities to the IRS. If you do not have this information, you can still seek help from your broker, but it may be a little more difficult than getting information for covered securities.
Let me know if this
resolves your tax question. Thank you for choosing TurboTax. Have a wonderful day! ~Leslie, EA
Hello LeslieB
My Mother passed mid-year 2019 and noncovered securities were sold and I am not able to find the cost basis for these Unit Investment Trust securities. TurboTax Home & Business (for the Individual return) and TurboTax Business (for the Estate return) throws an error because I don't have a Cost Basis to enter. What do I do?
That's tough. If you don't have records for this you will need to but a cost basis of $0 and pay tax on the full gain.
I plan to sell mutual funds. I have received both covered and noncovered cost basis and gains and losses for the funds. The covered will appear on my 1099 but the noncovered will not. How do I claim the noncovered cost basis and gains and losses in computing capital gains and taxes on my 2020 tax return?
does the fund show on the 1099B the cost basis? uncovered just means the fund doesn't report the cost basis to the IRS.
I have a record of what you classified as an uncovered gain. The difference of the tax is $2.200 tax owed instead of a refund. I tried correcting it in Turbotax but can't. Even if I change the designation to D which is long term covered.
@Beppe2002 You can't change the sales category from E to D.
Just delete wrong transaction and reenter it with the correct basis.
Category E is a trigger to IRS that you are supplying the basis.
Unless there is something unusual, they don't care.
Turbo Tax refuses to recognize the basis I computed for non covered mutual fund shares sold, and wants to report the entire proceeds as the capital gain. This is a long term gain and I computed the basis using average cost per share from my own records.
You can make a correction in the 1099-B entry screen.
As you continue through the interview you will be able to manually enter each transaction.
How about crypto currency sales and purchases. I only received a tax statement. Do I count these as covered or non covered? All of the crypto is short term, all transactions were made in 2020. Thanks
It depends on the type of cryptocurrency you are talking about. I've gathered some very useful (and somewhat voluminous) information that I hope will be helpful since I am not sure what type(s) you have and whether or not you are a broker or an individual. Both covered and non-covered are required to be reported, but the differentiation is more complex than a "they are or they are not". Yes, one of those tax "it depends" situations. My professional opinion on this is that the proverbial jury is still out on this one.
For tax-reporting purposes, the difference between covered and noncovered shares is this: For covered shares, we're required to report cost basis to both you and the IRS. For noncovered shares, the cost basis reporting is sent only to you. You are responsible for reporting the sale of noncovered shares.
Some more in-depth information for you:
Almost all cryptocurrency sales are taxable and would require you to check “yes” on crypto question on Schedule 1 .
For those of you who are still wondering why you have to answer the “crypto question” when you file for taxes, check out why the IRS included it here:
The following transactions would fall under the “sell” category on crypto question. Some are obvious and some are not.
These are some transactions which will fall under the “sell” category of the crypto question. If you are an investor, gains and losses arising from crypto trading activities are reported on IRS Form 8949 and IRS 1040 Schedule D.
(Examples from Forbes Jan, 2021)