Brokerage statements will not always report the cost basis and/or sales category, even if the information is available right on the 1099-B. The IRS is receiving the 1099-B information from the broker, but is relying on you to report the correct cost basis and category.
For unreported cost basis:
Make a reasonable estimate, based on old trade confirmations or historical prices from a source such as www.finance.yahoo.com
For unreported sales category:
If you held the security less than one year, use code C (short-term, not reported)
If you held the security more than one year, use code F (long-term, not reported)
The form 8948 contains three options of which you will choose one. Basically, TurboTax wants you to choose one of the three options for the transactions just exported from Merrill Lynch.
A) Basis reported to IRS
B) Basis not reported to IRS
C) Basis not reported to you.