Why are the sales proceeds and/or cost basis so high on my 1099-B?

[Dannyapp]

Urgent!!

Hi, I need your help here.

Why are the sales proceeds and/or cost basis so high on my 1099-B? Way more than actual value?

I filed a 2018 return and did not think it was an issue, but now it is an issue.

My son got an early admission from a private college and the Financial award was nothing. We were shocked and visited the Financial aid office. They explained that the proceeds and/or cost basis was over $500K and it was counted as our asset. 

This is what happened. had $40,000 of the available fund and I used margin to trade stocks multiple times.

IN 1099 all my multiple trades are totaled and made cost basis and the proceeds over $500K.. but in reality, I ended up losing $10,000 loss and I think  $500K was never in my account and was not an available asset at all.. Is there any way to explain this to the FA office and ask the reconsideration of the FA award?

[MinhT1 · Accepted solution]

The sales proceeds and cost basis reported on your tax return are the sums of all proceeds and cost bases on all your forms 1099-B. This means that if with the same funds of $40,000, you have traded say 15 times during the year, your proceeds and cost basis would be around $600,000 (plus or minus any capital gain or loss).

You can show your trading account to prove that your assets were only $40,000 and not the proceeds of $500k or more shown on your tax return.

[fanfare]

The cost basis and proceeds are the actual amounts you traded.

Then, the Gain or Loss column (h) will show a loss of $10,000.

You don't have  any asset worth $500,000.

[Dannyapp]

First of all, Thank you so much for your answer!! It really helps.

Do you think that providing the entire 2018 monthly statements and explanation letter will do? 

Thanks in advance!!

[Critter]

Ask the school what will make them happy ... but I think you really need to have a manager review the return as the current person clearly has no idea how to read one. 

[unknown41]

Idk if anyone is going to see this, but the same thing happened to me, I only had about $30,000 and my proceeds and cost basis was over $250,000 when I had a total loss of $5000 and at no point did I have $250,000 in my account. I just want confirmation that this is 100% normal because I nearly had a heart attack. 

[FangxiaL]

It is normal when you traded frequently during the year.

It shows that you had a lot of trades in 2021. It basically means that you used the same dollars to buy and sell financial assets. 

The total sales proceeds show the sum of sales proceeds you received from each of the transactions. The same goes for the cost basis.

It is different from your account value. 

@unknown41

[unknown41]

I see, thanks for explaining it. I was just confused thinking that something went wrong and for some reason it was saying that I had that much money in my account even though I only lost money that whole year. 

[Tizzle2432]

So basically my proceeds were lower than my cost basis….I lost money all year even after wash sales. My net gain loss is -10k. Is THAT gain/loss the amount that is paid in taxes? Basically a $3,000 deduction for the year? 

[RaifH]

Yes, that is correct. If even after accounting for wash sales, you have a capital loss of $10,000 for 2021, you would be able to deduct $3,000 from your other income this year.

The remaining $7,000 loss gets carried forward to next year to offset any capital gains in 2022. If you do not have capital gains in 2022, you will be able to deduct another $3,000 of your ordinary income. As the law currently stands, you can carry capital losses forward until they are entirely used up. 

@Tizzle2432

[Tizzle2432]

Thank you very much

[unknown41]

@RaifH Hello Turbo Tax expert, my friend is having trouble doing his taxes, he went to H&R Block and the person helping him out told him that the IRS will see his proceed as income (even though Im sure thats not how it works) and might tax him on his proceed. I’m aware that the IRS will only tax you if you have gains and if you have losses how you explained before, become deductions, which my friend only has losses and no gains at all.

[JillS56]

Please clarify your question?  Does your friend have a 1099-B?   

[unknown41]

@JillS56 Yes he does. 

[JillS56]

Your friend needs to enter the transactions from the 1099-B.   Once entered, the net effect of the 1099-B transactions will be reported as income or a loss.   However, you can only take a $3,000 capital loss deduction per year.  The remaining loss is carried forward each year until it is used up.    

Here's where you enter or import your 1099-B in TurboTax:

1. Open (or continue) your return if it isn't already open
2. Select the magnifying glass, search for 1099-B and then select the Jump to link in the search results
3. Answer Yes to Did you sell stocks, mutual funds, bonds, or other investments in 2021?
   • If you see Your investment sales summary, select Add More Sales
4. On the OK, let's start with one investment type screen, select the category that applies to your situation and Continue
5. Answer Yes to Did you get a 1099-B or brokerage statement for these sales?
6. At Let's get your tax info, choose how you want to enter your 1099-B (import or type it in yourself)
7. Answer the questions about your 1099-B

Form 1099-B is included in TurboTax Premier, TurboTax Live Premier, Self-Employed, and TurboTax Live Self-Employed (online) and in all personal CD/Download versions of TurboTax.

Where to Enter My 1099-B?