Can I enter a negative amount for proceeds (Box 1d) on my 1099-B?

[fanfare]

All I can say to that  is, show a loss as a negative amount by enclosing it in parentheses in column (h) not (e)

it makes no sense.

see the next sentence

"You must reduce the proceeds by commissions and
transfer taxes related to the sale."

if proceeds were negative you would have to increase the proceeds by commissions related to the sale.

[kimchu58]

Here is what I don't understand.

Reading thru the forum discussions, last year's TTX had the same problem and it was finally fixed because last year, we were able to import negative values in the Proceeds field. So why has this worked with last year's software ?

Also, two members replied that other tax software - TaxAct and H&R Block Premier tax accepts negative value, so why don't they have the same issue ?

Workarounds like switching the numbers between Proceeds and Bases may give the same net gain/losses, but the concern is the total net Proceeds will be different than what is reported to IRS from the 1099B. Will this trigger an audit because IRS thinks one is not reporting all the transactions ? No one wants an IRS audit, because it's like your "guilty until proven innocent" with a whole bunch of paper audits/interviews, etc. !!

I do appreciate all the members providing inputs and workarounds, it would be great if we can get an official answer from Intuit product team.

Thanks,

Kim

[vpeppen]

Changing the numbers as advocated, violates rule number 1 of tax preparation: Do not confuse the IRS!

[vpeppen]

If I reduce a proceed by commissions and taxes, the proceed becomes smaller. If the proceed is negative, it becomes more negative.

By the way, today I got my 1099 from Vanguard. Also, they report losses on an options trade as a negative amount in the proceeds box, consistent with the reporting by Fidelity and TD Ameritrade.

[TheRealTax2]

I took the advice of the TT experts here and set 1d to 0 and negative proceeds as a positive basis. This worked and gain / loss did stayed the same. Did I just set myself up for a letter from the IRS due to reported 1099-b proceeds and basis not matching? If this is the case then customers should be warned that the suggested change will trigger an audit. We now have three brokerages that are reporting negative proceeds on 1099-b. What has to be done if it turns out the TT fixes it on the software side? Would i just amend the return using the original 1099-b unmodified values?

[vpeppen]

I would not change the numbers downloaded from the brokerages! If you do that, attach an explanation to your return. If the IRS computer kicks you out because of the different total proceeds amount, it will end up on somebody's desk and the attachment will be enough to not receive a letter from the IRS. That is much less work and will be much less frustrating than having to answer letters from the IRS.

The best solution is to wait a little bit longer: I'm sure that Intuit will revise its position and ultimately agree with Fidelity, Vanguard, TD Ameritrade, and the IRS that negative proceeds are allowed in Box 1d (Especially, if more people call their brokerage and complain that their reported numbers are not accepted by TurboTax: These brokerages have more cloud with Intuit than we have).

If you owe money, and can't wait to pay, ignore the error messages about the negative amounts and print the return. The printed return is as it should be and you file it as a paper copy. If you get a refund, do this only if you can wait for your refund for a long time.

The last option is to change platforms.

[vpeppen]

You mentioned also the basis as a check. Given that the brokerages on their summary of 2020 Proceeds only report the basis of covered securities and not of non-covered securities (For instance, securities bought before 1/1/2012), it is not likely that the IRS computer is checking the total reported basis. For the proceeds, however, the proceeds of both securities are reported and, as such, is an easy check.

[TheRealTax2]

Thanks. Looks like I'll be sending in an amended return as I already efiled. Hopefully TT and IRS fix this soon. 

Instructions for amending returns say that all forms and schedules need to be resubmitted even if they don't contain changes. It takes up to 16 weeks to process. 

[brxb88]

Thanks for the suggestion, vpeppen..

 thinking about the  switch to h and r block

a bit concerned that irs will reject the h and r block return --even though the block software accepts the negative proceeds--as per this discussion board

[brxb88]

Thanks for the suggestion, kimchu.

 thinking about the  switch to h & r  block but 

a bit concerned that irs will reject the h & r block return --even though the block software accepts the negative proceeds--as per this discussion board

[Joe_T]

Here is how I resolved the issue.  Let me preface this by saying 1) TT customer service was ZERO help. They are just not trained well enough to solve the problem, and 2) I had over 130 stock transactions for the year.

First thing I did was have TT pull transactions from my Ameritrade account.  I then confirmed that the total of the transactions TT was showing matched the total of all transactions on the Ameritrade 1099. 

On the TT screen that shows the 1099 totals for stock trades, I clicked on edit so I could see each individual stock transaction.  If I found an option trade that had negative proceeds, I looked for a corresponding trade for the same stock that had positive proceeds.  I then netted the two together to create a single transaction and then I deleted the transaction with the negative proceeds.

For example: My 1099 for 2020 show total proceeds of $1,250.  I had a stock option trade with ABC Corp resulting in negative proceeds of $750 and a stock trade with ABC Corp resulting in positive proceeds of $2,000.  In TT, I edited the $2,000 transaction in TT so box 1a reflected positive proceeds of $1,250 ($2,000 less $750).   I then deleted the transaction with the negative $750 in proceeds.  Remember, before deleting the transaction with negative proceeds, make sure you not only combine the negative proceeds with the positive proceeds, but also the costs of each transaction and any disallowed amounts.

This worked for me because I had plenty of positive proceed transactions for each stock which I used to net the negative proceeds against.  Because the totals in TT tied out to the totals on my Ameritrade 1099, I do not think this will cause an audit issue.  But I guess we'll see because I was able to file my return electronically.

Hope this helps.  Just remember, whatever you do, make sure you tie the results out to the 1099 after each change.

[vpeppen]

The IRS really states clearly in the instructions of the 1099-B that the proceeds of an options trade with a loss should be reported as the brokerages reported it to you: With a negative amount in the proceeds box. Therefore, there is no reason at all why the IRS would reject this.

[vpeppen]

Joe T, I agree that you can play with the numbers to make it fit: The end result, your tax liability, is correct, and also the totals of the 1099-B on the return match the numbers on your 1099-B. Most likely, the IRS computer will therefore accept your return. But you are taking chances:

It says on your 1099-B: "1099-B amounts are reported individually to the IRS". Your numbers are now different from what the IRS got. Also, each option of a certain stock, but with a different strike date and/or strike price is considered by the IRS as a different asset. That means that you are mixing different assets to get to the right result. If the IRS, for some reason, looks at these individual numbers (after all they have the original numbers), I'm not sure they can figure out what you did and you might get a letter to explain what you did (Remember, do not confuse the IRS). Therefore, I think I will wait for Intuit to change its mind and correct this. (Also, my return showed 143 errors, which were all because of these negative proceeds numbers; it would take a lot of work on my side to follow your advice).

[brxb88]

vpeppen, excellent points but what will you do if TT does not make the software corrections? I don't mean that at all in a snarky way, and other posters can of course weigh in.  Just don't have a lot of confidence that TT will make that edit.  My phone call to customer service and that of others did not seem to make progress.

welcome all suggestions.  cheers.

[vpeppen]

brxb88, I always make sure that at the end of the tax year I owe the IRS. So, if Intuit does not correct this error, I will download my 1099, and ignore the error check for these negative proceeds amounts. The numbers on the return will be correct, but because of the assumed errors by TurboTax, you can't e-file it, so I will mail it in with a check (which, I can assure you, is deposited almost immediately by the Treasury). It does not matter to me when the IRS will deal with my return. Of course, if the IRS owes you, it is a different story.