negative cost basis on form 8949 preventing e-filing

[vrubright]

Is there a way to work around a negative cost basis on form 8949 preventing e-filing?

[JamesG1]

The IRS will say that an investment cost basis cannot be negative.  That is why you are prevented from electronic filing.

Are you referring to a negative cost basis reported on an investment on an IRS form 1099-B or the IRS Schedule 8949?

This IRS website states:

 A shareholder's stock basis is decreased, but not below zero...

If so, you may have to report a zero cost basis or re-construct the cost basis from your personal records.

[Edited 03/22/2026 | 5:38 AM PST]

@vrubright 

[vrubright]

Is zeroing out the negative cost basis and increasing/decreasing the proceeds to achieve the same gain(loss) acceptable to the IRS?

[vrubright]

Limited partnerships (LP) reduce the cost basis reported on their K-1 every year by the amount of distributions and losses. After 20 years of ownership the cost basis has turn negative. In my case the cost basis is $-5,520. When reporting this on form 8949 column e, the form subtracts $-5,520 from the sales proceeds $13,637 in column d, giving the correct gain of $19,157. SALES PROCEEDS - (COST BASIS) = SALES PROCEEDS + COST BASIS. I see nothing incorrect about reporting this as a cost basis of $0 with proceeds of $19,157 to avoid not being able to e-file because of a negative cost basis.

In addition to this question, I also have a question about what to do with the duplicate sales information I received from the brokers 1099-B. This information is incorrect because it does not have the adjusted cost basis as described above, resulting in a net loss. The broker said the K-1 data has priority. Should I just not include a 1099-B?

[RobertB4444 · Accepted solution]

You can choose to report the income that you have received through the 1099-B or the K1.  Just don't enter both!