option sell can have the negative cost acquisition. The system does not pick up while importing the 1099B and it neither allows manual correction as it expects at least 0 in that field. I think its a bug and needs to be resolved as it it very much possible to have the
Box 1e - Cost or other basis = (-100) and
Box 1d - Proceeds = 0
Gain = +100
System, after importing, asks to review these items.
There is apparently an issue with the import file the broker provides. there can be no negative cost. what you have on a short sale is proceeds. then if it lapses it has zero cost resulting in gain. if you close out the short sale with a purchase the that should be the cost the broker is reporting. if the option is excercised the procced are supposed to be add to the proceeds from selling the stock.
My broker does similarly, but puts negative amount in proceeds, and zero in cost.
My tax software accepts this, but will not allow a negative amount in cost.
BUT
e-File would not work with negative proceeds on Schedule D. This was a known problem and
IRS suggested a work around to tax software providers so the e-File could go through.
Perhaps that problem has been fixed by now.
Schedule D is supposed to allow a negative proceeds and you should be able to e-File.
cc: @Mike9241
@fanfare @sanash my brokers do the opposite for short sales. proceeds are positive on 1099-B as is cost if they are closed out, so I have no issue with import or e-filing. to me negative proceeds when you actually received them seems illogical. also, as you pointed out negative cost is not allowed so if i sold for 10000 and closed out for 8000 there's a problem in showing the proper 2000 gain. if I show negative proceeds, desktop version, and assuming no cost - option expired, instead of a 10000 gain I have a 10000 loss. An extremely huge problem
In the example I have from my broker, the transaction did result in a loss.