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Richard100
Level 1

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

If this is a 2020 year sale, brokerage 1099 will not match tax forms.  Next year brokerage 1099 will show sale of stock actually sold in prior year 2020. How does this get reconciled by IRS?
2 Best answer

Accepted Solutions
ThomasM125
Expert Alumni

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

The best solution would be to get the broker to amend the form 1099-B, but that may not be possible.

 

You should report the sale in 2020 since that is when you received the proceeds. In 2021, you will need to enter the sale as you normally would, just modify the cost basis to cancel out the sale amount.

 

Another option is to not report the sale in 2021, but you will get a notice from the IRS assessing additional tax. If that happens, you can explain what happened and the IRS will reverse the assessment.

 

 

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Mike9241
Level 15

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

In almost all cases, the trade date controls the tax-reporting year for a stock sale. That is, if you sell stock by the last trading day of this year, you report the sale on this year’s taxes. The exception occurs when you close out a short sale for a loss, in which case the settlement date controls the reportable tax year.

 

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5 Replies
ThomasM125
Expert Alumni

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

The best solution would be to get the broker to amend the form 1099-B, but that may not be possible.

 

You should report the sale in 2020 since that is when you received the proceeds. In 2021, you will need to enter the sale as you normally would, just modify the cost basis to cancel out the sale amount.

 

Another option is to not report the sale in 2021, but you will get a notice from the IRS assessing additional tax. If that happens, you can explain what happened and the IRS will reverse the assessment.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Mike9241
Level 15

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

In almost all cases, the trade date controls the tax-reporting year for a stock sale. That is, if you sell stock by the last trading day of this year, you report the sale on this year’s taxes. The exception occurs when you close out a short sale for a loss, in which case the settlement date controls the reportable tax year.

 

Piper22
Level 2

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

just read the thread here and made decision to sell stock at a loss now (12/27), so it can settle in 3 days, before NYE - the sale was at $1 per share for a loss, however, hoping slipped in before the digital finish of settling stock trade and proper reporting so do not have any issues when turbo tax pulls data - especially since it's now trading on a Canadian OTC market & definitely needs full 3 day settlement - this loss offsets other gains for '21 in an e*trade account, so going back to request anyone to amend tax docs would not be fun even if possible.

fanfare
Level 15

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

It's up to you but if it were my tax return, I would go with the 1099-B the broker gives me and the IRS, exactly.

But wait until March to be sure you are not going to get a corrected 1099-B.

fanfare
Level 15

Sold stock 12/31/2020 and received $$$ into my account. Settlement date was in Jan 2021. Brokerage 1099 for 2020 doesn't show sale. For tax purposes is this a 2020 sale?

Stocks now settle in two days, not three.

Options settle in one day.

 

TD Ameritrade says:

"December 31.

  • Last day to execute the sale of a long position for the 2021 tax year
  • Last settlement day to cover a short position for the 2021 tax year (trades must settle by 12/31, typically 2 business days after they execute)"

@Mike9241  Note: it does not say "short position with a loss".

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