My 1099B has a negative cost basis

[tsbredin]

Because there was a 'return of Capital' greater than the proceeds.

[TomYoung · Accepted solution]

I assume the issue here is that TurboTax won't accept that negative number in the cost basis box.

What you are going to have to do here is report two "sales."

The first sale will put the negative number in the "proceeds" box, with $0 basis.

The second sale will report the proceeds of the sale, also with a $0 basis.

There's really no other way around it since TurboTax, a couple of years ago, dis-allowed negative basis numbers.  DO NOT fret about things not perfectly "matching" between the 1099-B and what you report.  The IRS uses a sort of "fuzzy logic" for these things so not every little "mis-match" is going to generate some sort of follow up from the IRS.  But, more importantly, you'll have stated your income with respect to this transaction correctly and and that's what is really important.  The IRS can't really lay a glove on you if your income is correctly reported.

Tom Young

[airahcaz]

ok, well what about filing NJ?  NJ schedule B currently produces an error on this - I think TT fixed the Fed issue.

[BobDoesHisTaxes]

Assuming your insight into TurboTax's handling of the 1099 is accurate.   Why should we make up transactions to correct for an clear programming fault. The fact that TurboTax insists on forcing an incorrect record should be fixed and save those future users from having to research this problem.   Seems like bad advice to create make believe entries to try to fool the IRS system into thinking all is ok with the submission.  very bad advice

[TomYoung]

Don't shoot the messenger.  I don't work for TurboTax, I'm a volunteer.  Take your beef up with TurboTax directly.

[keebin_tax]

I was digging around the forums and apparently this is a bug that they fixed last year (2019 tax year). However, it looks like the issue still exists for 2020 tax year filing. (I just got tons of errors) My 1099B negative amount proceeds are correct. I write/sell options and this sometimes results in negative proceeds. Apparently, TurboTax had to hot fix this last year. I'm assuming they will do the same this year. 

[David175]

So when is this going to be fixed?  The IRS is accepting returns starting today and I am ready to file except for this problem with the negative numbers for stock sales.  I had no problem with the 1099B treatment by TurboTax last year.

[ReneeM7122]

The error messaging you are seeing with regard to the wash sale entries is a result of automatic rounding of the number imported from your broker or typed in by you.  If the wash sale adjustment is $0.49 or less, then it is automatically rounded to zero.  This type of rounding is allowed by the IRS.  Unfortunately, zero is not a valid value for this field -- thus the error message.

To resolve the issue, you can edit each individual transaction and delete the amount entered in the wash sale adjustment if it is $0.49 or less.  This will clear the error message.  

To do this, you will need to revisit the input section for the Form 1099-B transactions.  Use the following steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “1099-B” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to 1099-B”
• Click on the blue “Jump to 1099-B” link
• Click Edit beside the institution name
• Click Edit beside each transaction that contains a wash sale adjustment amount of $0.49 or less
• Delete the wash sale adjustment amount and click Done

@David175

Answer from AnnetteB6

[Paul_A]

I buy and sell options in the course of my trades.  Often that involves buying one strike and selling another, creating a vertical spread.  The profit or loss is offset one vs another.  The issue remains an open item for me as the cost basis can still be negative and it's legitimate.  My 1099B is full of negative sales prices.  What's a person to do regarding this matter?  Wait for another hot fix?

Thanks,

Paul

[smithd571]

Renee's solution does not seem to fix the problem. The problem is with negative sale proceeds. 

[Critter-3]

You cannot have a negative sales price ... you did not pay someone to take the stock off your hands.  You could sell it for zero and have a basis in the stock which will give you a negative entry but you cannot have a negative sales price. 

[smithd571]

As brokerages report it, you can, which is why there are so many people with the problem. If you sold a put option for instance and the underlying security drops below the money and you want to exit the position, you do in fact have to “pay someone to take the stock off your hands” or rather pay someone to exit the position. Hence the negative proceeds entry.

That said, the solution that I found is to correct the brokerage entry manually by doing the following:

If you have a negative proceeds entry, instead put $0 in the proceeds column and a positive offsetting entry in the cost column. As you are techincally "buying to close" the position this does make sense. This seems to have fixed the problem.

Critter 3 is right, albeit likely inadvertently.  

[Cleomobile]

This did not work for me. I had 2 sales that had 0 cost basis so I just adjusted it to $1 and it is still giving me the review error. I have no idea what to do. 

[JohnB5677]

Turbo tax does not allow negative numbers in 1099-B box 1d

Some brokers  now reports losses of short options on 1099B as a negative number for proceeds in box 1d and a zero value for cost basis, rather than separate values for cost basis and proceeds that show a loss. 

The broker explanation is: "We are now updating our reporting of short options on the 1099-B to reflect how the IRS is now requesting that these transactions be reported.  In this new format, the cost basis and proceeds for short options is consolidated into Box 1d in a net amount."

To be able to post a negative value to form 1099-B box 1d follow these steps.

1. Select the option for a 1099-B
2. Select to type it yourself
3. Enter Bank
4. I'll enter one sale at a time
5. Enter the stock data and leave 10d BLANK
6. When you hit Continue you will get a RED error message
7. At the bottom of the screen select Allow me to continue with incomplete information. [Continue]
8. Any less common items will be blank.  Select Done
9. No this is not employee stock
10. Select the last item An adjustment is required for reasons not already covered.
11. Enter the negative number that you had in Box 1d.This will complete the transaction.

@Cleomobile @smithd571

[Cleomobile]

I do not have anything negative to report! That is my point! For some reason Turbo Tax is saying I do. There is not one negative number on my 1099s or inputted into my return. I have cleared and re-entered the information  manually twice now and re-imported 3 times. I have completely cleared and deleted my return starting over using various methods 3 times now. Every time it says I have negative cost basis. There is no negative anything.