Incorrect form 8949 handling for incorrect cost basis with Part 1 Box B checked

[nes1209]

IRS instructions say enter B in column (f), put the correct basis in column (e), then enter -0- in column (g). If I use the corrected cost basis field in 1099-B input form, TurboTax fills in the difference in column (g), which is incorrect. If I override the cost basis field directly, TurboTax won't fill the column (f) (because it doesn't know anything is wrong). Any solutions?

[MiriamF]

Column (g) should record the amount of the basis adjustment. If that's not what it is doing, and the calculated gain or loss is incorrect, please write back.

[nes1209]

Column (g) should not record the amount of basis adjustment in this scenario as per IRS instructions. This is because Part I box B indicates that the broker did *not* report the cost basis to IRS.

2016 Form 8849 instructions page 7: "If this transaction is reported on a Part I with box B checked at the top or if this transaction is reported on a Part II with box E checked at the top, enter the correct basis in column (e), and enter -0- in column (g)."

[MiriamF]

Are you getting the correct gain or loss in column h?

[nes1209]

Final gain in column (h) is correct.

[MikePalmer]

I have a similar problem with adjusting what TurboTax calculated as basis for a same-day exercise/sale of a NSO.  I received a 1099-MISC from my former employer for the exercise and I need to adjust the cost basis so as not to be double-taxed on the 1099 amount (the 1099 is being reported on its own Sch C, as I believe it should be).

[MiriamF · Accepted solution]

If the final gain in column 1(h) is correct on your 8949, then I would go with the method of data entry that produces the correct answer.

TurboTax instructions say to enter the 1099-B exactly as printed, then adjust the basis by adding additional information (see the screenshot below).

You are correct that the IRS instructions for form 8949 say that, when the Sales Category is B or E (noncovered security), then the correct basis should be entered in column 1(e) and zero should be entered in Box 1(g). But the important issue for you is to get the correct answer for gain or loss in Column 1(h), since that will determine your tax. Use whichever method gives you the correct gain or loss.

[Abhi]

I want to make sure I understand this (I have the same situation, Part 1, Box B checked & RSU Sale)

*IRS instructions* - Put B in column (f), put the correct basis in column (e), then enter -0- in column (g).

*TurboTax Option 1* - Use the corrected cost basis field in 1099-B input form, TurboTax fills in the difference in column (g) and puts "O" in column (f)

*TurboTax Option 2* - I override the cost basis field directly, 1(e) now shows the correct cost basis but TurboTax won't fill the column (f), so column (f) is blank

Both TurboTax options technically look like incorrect reporting even if the final answer (Net gain) is correct.

Which option do I go with for filing? Is there a way to manually report 8949 in TurboTax to match the IRS instructions?

[katsy15]

I have same problem, only reported in Box D. Can I use the same method as you advise for Box E?

[MiriamF]

Yes, you can use the same procedure for Sales Category E.

At TurboTax, we tend to discourage people from altering the tax documents they receive. By following the recommended procedure, you get the correct result without changing the tax document directly.

By entering the 1099-B exactly as it was received, then adjusting basis and holding period in a separate action, you have a clear path for the IRS and for you regarding the changes you made, rather than errors of data entry.

[onthehalfshell]

Why doesn't TurboTax fix this? It seems pretty basic, and has been going on for several years. It's a hassle having to figure out what to do. I will send a letter accompanying the TurboTax generated Form 8949 which says that a TurboTax bug does not allow following IRS instruction by putting Zero in column (g).

[fanfare]

IRS instruction assume you are using a pencil, eraser and calculator.

[fanfare]

Form 8949 in PDF-fillable form is available at <a rel="nofollow" target="_blank" href="http://www.irs.gov">www.irs.gov</a>. You'll have to file on paper.
E-file does not allow you to attach a letter complaining about the software.