Do I have to include copy of 1099-B with Form 8949 for LT noncovered transactions (Box E) that were entered as a summary rather than individually?

[GeoffreyG · Accepted solution]

Strictly speaking, the IRS instructions call for sending in (i.e., mailing) your Form 1099-B, or an acceptable substitute, to the IRS, listing each of your individual trades for the tax year, where the taxpayer chooses the option of making just a summary entry on Form 8949 (which then "flows" onto Schedule D).

As a practical matter, however, and as a CPA myself, I've found it perfectly acceptable to file a tax return with just a single summary entry in the capital gains and losses section, as long as the brokerage firm or other financial institution is clearly identified on Form 8949, and as long as the net proceeds, gains, losses, etc. totals exactly match the summary shown on the last page of the actual 1099-B received by the taxpayer.  Really, that is all the IRS will be looking for . . . not all of your individual trades, especially where there could be hundreds, or even thousands of them.  Rather than adding up your individual trades, what the IRS really needs is your net gain or loss summary, as that is what your tax calculation is ultimately based upon.

Certainly, I would strongly recommend to anyone that they keep their complete 1099-B as a "back-up" or proof, in the unlikely event that the IRS ever asks to see it, for as long as the statue of limitations exists for that particular tax return.  However, there is no real or actual need to mail this document (or another summary of your brokerage activity and trades) to the IRS -- unless, of course, you are ever asked to do so.

If your capital gains / losses figures on your tax return agree to the last dollar with what your brokerage firm reported to the IRS, then that's all the IRS computers are really checking to see here.

Thank you for asking this important question.

[your_land]

But IRS says to include form 8949 if you have any adjustments like wash sales. Do they mean adjustments made by yourself but not the broker?

[your_land]

And how can you attach 1099-B if this form is for your information from broker and your task is to create 8949 basing on 1099-B?

[deltatune]

Hi Geoffrey,

I'm real interested in your answer here in regard to your Form 8949 and Schedule D filing strategy, as I have thousands of short-term (ST) trades this year.

So if I understand what you said in your reply to pw2013hdrg, with my single brokerage 1099B (yet to arrive, but Box A will be again checked), I can do the following:

1.  Form 8949:  Complete a single summary entry in Part I, Block 2, columns (d), (e), (g) and (h); Identify the brokerage firm instead of listing every single trade; Make sure net proceeds, costs basis, etc. match my 1099B.

2.  Schedule D:  Complete Part I, Block 1b, (d), (e), (g) (h), and 7 (ST cap gain in my case).

3.  Mail in a copy of the 1099B transactions, Form 8949 and Form 8453.

4.  Paper file my return instead of e-filing (since I did not follow the interview process for Form 8949 or Schedule D).

Do I have this right, Geoffrey?  Thanks in advance.

[fanfare]

Exception for Category A and D.

 The instructions are very explicit.

When the sales category is A or D, Form 8949 is not required for aggregated  transactions without adjustments.  No mailing is necessary. This covers the case of active investors doing a lot of trades if they avoid wash sales.

For all other categories, and for transactions with adjustments there is no exception.

If you want to ignore the requirement to submit transaction details, have at it.

The mailing of a photocopy of the consolidated 1099B is acceptable, or of an actual Form 8949 prepared by hand or supplied to you.

Note: at least one other tax product allows you to attach a PDF of transaction detail when you e-File, and  this takes care of the matter immediately. TurboTax doesn't have this feature.

[deltatune]

Thanks for your reply, fanfare.

To be clear, I plan to, and will submit, a copy of my 1099B transactions as I have many wash sales adjustments.

My question was whether I could submit a summary entry on my Form 8949 instead of listing every transaction separately, i.e., I would only complete the last line of the short-term transactions (Part I, Block 2, (d), (e), (g) and (h). 

[Mike9241]

yes you can.  you need to submit form 8453 with the details. see the instructions for filing it and the support make sure M appears in column f of form 8949. (M  indicates to the IRS that this is a summary total so it will be looking for the form and details to match up).  

only submit detail to match the summary totals.

https://www.irs.gov/pub/irs-pdf/f8453.pdf 

[deltatune]

Thank you so much, Mike9241.

[deltatune]

Hi fanfare,

I appreciate your answer yesterday to my question about Form 8949, and had some follow-up questions that just came to light after I loaded TurboTax Premier. 

I've used TurboTax for over 15 years.  This year, as I practiced entering data, the program does not appear to handle 12 digits. 

Last year, I made over 5,000 stock trades and had many wash sales.  My gross proceeds is over 11 digits (i.e.,  over $999,999,999.00).  (I wish I could say I was super profitable, but unfortunately, while my trade amounts were high, my profits were not.)

My questions: 

--Is there a work-around in TurboTax that will allow me to summarize my trades on Form 8949 in order to handle 12 digits? 

--Could I manually pull down a blank copy of Form 8949 and enter my summary trades in 12-digits, thereby skipping the interview and input process? 

--If I manually complete Form 8949, I am expecting to manually complete Schedule D as well.  Right?

--Would I still be able to e-file if I manually complete Form 8949 instead of using the interview process?

--Finally, does Intuit have any other tax software that would handle 12 digits?

Appreciate your time,

...terry

[fanfare]

I'll get back to you later ...

[Mike9241]

TT is not designed for such large amounts. you need to use a pro.  if you use overrides or manual forms you can not e-file. 

[fanfare]

I) If your cost and proceeds are in the range 10 million to 99 million,
the simplest solution is to break up your total summary entry into two or more parts that are within the amounts permitted.
Then the summary line and grand total can exceed 9,999,999 because TurboTax puts it in there.
You will be able to e-File.
You may want to file on paper anyway since you need to attach transaction details.

--
II) If your totals are over 99 million,
then you have to do your taxes modulo 100,000,000 or 10^8.
Assuming your gain is less than 100,000,000 TurboTax will calculate your correct tax.

Then get Schedule D and Form 8949 in fillable PDF format at www.irs.gov .
You will replicate the forms but with the true numbers.
Print your tax return and remove the Schedule D and Form 8949 from TurboTax
and replace with your own documents.
You will be filing a paper tax return by US Mail.
--
III)   Your gain is over 100,000,000.
--
Scenario III is unlikely but if you find yourself in that situation,
you can get Morgan Stanley or some other big bank to do your tax return for you.

[deltatune]

Thanks, fanfare.  Your solution in II) is what I will do.  (And you're so right!  III) didn't happen.)

[trotman1953]

Then why does Turbo Tax require submitting the 1099-B with the income tax return when there is uncovered long term capital gain?