Hello!I have a complicated tax case connected to stock market(E*Trade broker).
1) I have a lot of transactions last year(2020) - more then 10.000 (ten thousands).All of them - "short term".
2) I have total sales more then $10.000.000(ten million)
3) I have a lot of wash sales transactions (more then thousand)
4) Among all transactions there are ESPP and RSU sale transactions that require cost basis adjustment.
5) I've got dividends (~$5000)
I know that TurboTax has limitations for imported transaction from each broker (max 2500),
limitation on "total sales sum" (max $10.000.000).For all adjusted transactions(wash sales+ESPP+RSU) I should have details in form 8949 (it should have hundreds of pages - so it's not impossible to send IRS printed form) .
Taking into account all above, what the best approach you can suggest to proper file my taxes in TurboTax?
I'm ready to pay some extra money to ease for myself the process of filing.(for example for some auxiliary specialized software)
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You can enter summary transactions into your Turbo Tax program that will reduce the number of entries made Here is a step by step instruction on how to report summary transactions in Turbo Tax found in this link.
How to enter a summary in lieu of individual transactions
Your brokerage statements should include a summary of your transactions, grouped by sales category, for example, "Box A short-term covered" or "Box D long-term covered." You'll enter the summary info instead of each individual transaction.
Unfortunately this advise will NOT work for my case - it's only applicable to the case where no any adjustments are required , but I have wash sales+ESPPs sales - they are all "Box A" transactions that need to be adjusted.
OR I should mail printed hardcopy of form 8949 with detailed transactions to IRS - it should be many hundreds of pages...this in insane to send IRS big shoe box with paper.
Another issue - TurboTax has limitation on "total sales sum" - max $10.000.000, but I have more then $10.000.000.
it depends. Do you have a wash sale transaction with each trade? Can you consolidate some of the transactions that have no wash sale information in them?
Of course not: only ~10% of transactions are wash sales, ~90% - not. But how to consolidate them? Manually go through all 10000 transactions and pick only those without wash sales? It's unreal.
I also have a similar case. The issue is the sum of the total sales for my case also exceeds $10,000,000. Due to this even if I want to enter just the summary I can't.
How can this be solved?
There is tax software that lets you attach a PDF of your consolidated 1099-B when you e-File.
This obviates mailing paper details to IRS in Austin TX.
Hint: it's not TurboTax.
I'm going to use the solution below for my case, but I want to hear 2nd opinion.
Solution is: I arbitrarily divide my "totals" from "Covered Short−Term Gains or Losses on Net Proceeds" of 1099B for 2 huge individual sales - each of them will be less then "10,000,000.00" (this division I make arbitrarily because I's hard to take out from 10000 transactions only "wash sale" sales).
For one of them (let's say sale "AAA") I make "totals" wash sale adjustment from 1099B.
The other (let's say sale "BBB") can be just ordinary sale without any adjustments and may be with "0" gain - just to have sum of these 2 sales to match the "totals" numbers of my 1099B.
The question IS: does it make sense to set adjustment code "M" for sale "BBB" to declare it as "aggregated of multiply sales without adjustments"?
Per my understanding in any of case above (or with sale "BBB" as "regular" or as "aggregated") I don't need to mail IRS the "big shoe box" of paper (more then 5000 pages of my 1099B).
You do not have to be that complicated, but if you want to keep a clear distinction you can split the wash sales from the other transactions.
Your brokerage statements should include a summary of your transactions, grouped by sales category.
There are seven possible "Box" designations that indicate the holding period (Long/Short Term) and the reporting status. These are the only ones you have to summarize. If you want to manually enter your 1099-B as the summaries.
Code A. This code indicates a short-term transaction for which the cost or other basis is being reported to the IRS.
Code B. This code indicates a short-term transaction for which the cost or other basis is not being reported to the IRS.
Box C. Report on a Part I with box C checked all short-term transactions for which you can't check box A or B because you didn't receive a Form 1099-B (or substitute statement).
Code D. This code indicates a long-term transaction for which the cost or other basis is being reported to the IRS.
Code E. This code indicates a long-term transaction for which the cost or other basis is not being reported to the IRS.
Box F. Report on a Part II with box F checked all long-term transactions for which you can't check box D or E because you didn't receive a Form 1099-B (or substitute statement).
Code X. Use this code to report a transaction if you cannot determine whether the recipient should check box B or box E on Form 8949 because the holding period is unknown.
If you post them under these designations you can simply mail the summary sheets and not the entire shoe box.
1) I'm not able to enter "summary of your transactions" for "Code A" - I have gross numbers MORE then "10,000,000.00". TurboTax DOESN'T allow to enter numbers more then "10,000,000.00" .
2) There is 2nd reason I'm not able to enter "summary of your transactions" for "Code A" :
I have ESPP sales under "Code A" that require manual adjustment of cost basis.
3) This is the first time ever I hear that if you enter "summaries" by categories "you can simply mail the summary sheets". It's doesn't make sense. IRS wants some kind of "statement of detail".
IRS Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary.
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As an active investor, be aware that your category Box A or Box D sales without adjustments do not require Form 8949, so there is no reason to import or key in those transactions.
Instead use the "enter a summary" option to put your numbers on Schedule D Line 1a or Line 8a.
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If you have wash sales, it gets more complicated since those adjusted transactions have to be itemized on Form 8949 and the summary totals adjusted accordingly.
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In your situation, that exception is not going to help much.
Again, I advise going with the other tax software that will let you attach your 1099-B PDF when you e-File.
You can even separate it into multiple PDF files if one PDF is too huge.
complain to your broker, ask them why the won't give you two selectable reports for import:
transactions with adjustments and,
transaction without adjustments.
Yes, I have a HUGE amount of wash sales ,so even mailing only them takes a lot of paper. Not an option!
So the only way for me - summarize Category A and apply total amount of "wash sales" to this "summary total".
After that I have 3 options:
1) Find the way how to attach 1099B PDF in TurboTax.
2) Use another tax software that allows to attach 1099B PDF.
3) Use the way I described above - enter the summary of Category A not as a "summary" but just as single huge transaction with wash sale adjustment.It just should correspond all Category A "totals" data from my 1099B.
Fortunately IRS gave us an extra month.
If you use option 3)
the grand sub-totals will appear on Schedule D line 1b. e-Filed Form 8949 will say "see attached".
TorboTax supports this on the summarizing page.
That's also the way you do option 1), if available.
If you can separate out the transactions with adjustments into PDF pages,
that's all you have to mail to the IRS if you are mailing details.
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