Do TurboTax “Rounded” 1099-B input entries need to be manually “corrected” to be consistent with 1099-B reported to IRS?

[MaxTax00]

Yes, TurboTax is not including Covered Securities without Adjustments on 8949 this year. That makes perfect sense as the IRS will get that data directly from the Broker so a summary is all you need for that. The wash sales are tricky, particularly for active traders. Most very active traders rack up hundreds of wash sales throughout the year and then harvest them by closing their positions and not trading those securities after Thanksgiving. I am also getting lots of 0's and 1s for my wash sales which is annoying but if TurboTax is set on rounding every number on 8949 then not much I can do about it.  I might add a line for "Rounding Adjustment" to make everything tie out to the exact dollar. 

[ericsvendson]

Firstly, thank you for your response.

I am preparing (gratis) this tax file for an elderly neighbor.  These 1099-B's are from a managed account and I have always mailed in the tax forms for the past 11 years.  

The process of rounding up/down is a PROBLEM with the 2020 turbotax software and I just wanted to aid my input to the six pages of 'complaints' re this program error.

[ktheess]

I agree.  I am having the same issue.  Spent a decent amount of time calculating cost basis for a Gold Trust ETF only for it to be wiped out by what seems a new 2021 TT feature "rounding at the entry level" instead of rounding at the end.  In my view this is a bug not a feature and as @sophieluu1606 has researched seems inconsistent with IRS guidance (and anything you learn in 1st semester engineering school).

Please fix this before we file.  

[fanfare]

@MaxTax00 

do you report your wash sale details as required by the IRS?

hundreds of wash sales means dozens pages of Form 8949.

"I might add a line for "Rounding Adjustment" to make everything tie out to the exact dollar."

Why not? I seriously doubt IRS ever looks at these records, unless a large audit is underway.

The IRS wash sale rules are a holdover from the good old days of a century ago. when operators, big shots, and rich investors tried to fool the IRS and reduce taxes at the end of December with invented losses.

Nobody had hundreds of wash sales..

[MaxTax00]

@fanfare 

Yes, all the wash sales go on Form 8949 and TurboTax actually does a nice job with it as TurboTax automatically pulls the wash sales from my brokerage account import and itemizes them on 8949.  The rounding issue creating 0's and 1's is not ideal for precision but it is easily explained.  And yes, it makes for a very lengthy Form 8949.  I have been reading lots of stories in the Financial News about how there are millions of new pandemic daytraders ....and many will have 100+ page tax returns this year...hope the IRS systems are ready for the influx! It really is a whole new world with mobile phone "free" trading services like Robinhood. There are people who sit there and flip stocks 5 days a week. Of course, most will eventually lose money but that is a topic for another day.

[chuck6625]

It's not about like or not like the rounding. It's about accuracy. It's about if the substantial discrepancies for proceeds/costs/wash sales caused by early rounding are acceptable by the IRS.

I wouldn't need TT if I file by summary and will be sending in more pages of 1099-B (than 8949) which I try to avoid.

Each wash sale is reported with each transaction so it's included in the PDF pages when you mail in.

Why would we need a report of transactions without adjustments?

The gain/loss is calculated as proceeds - costs - wash sale. You just need to enter proceeds, costs, and gain/loss if you file by summary.

[chuck6625]

I was thinking the same thing,  adding a line for "Rounding Adjustment".

Not sure it's legitimate. But I guess so as long as all the final numbers match with the reports.

[fanfare]

@chuck6625 

"Why would we need a report of transactions without adjustments?"

You must report all transactions without adjustments unless they are category A or D.

For A and D, IRS allows an exception. Form 8949 is not required.

You must report all transactions with adjustments.

If you mail it in the entire report, that satisfies the requirement..

[rockdoctor]

The adjustments are beside the main point which is that even just ordinary 1099B transactions are added together from the 8949s to get the total on Schedule D. By rounding the 8949 you end up with a schedule D that has a different total than the one provider by the broker on 1099B which they share with IRS so nessarily there will be a mismatch.

[rockdoctor]

Also as others have attested and can ve formally proven with logic the rounding-induced error will scale with the number of transactions so someone can end up under-reporting taxable gains by hundreds or thousands of dollars. Obviously this is a bug.

[mjrengaw]

@rockdoctor Exactly the issue. Unfortunately folks seem to insist on not keeping the main issue in sharp focus. The other important thing to note about this is that it is entirely new behavior that just started this year. It was done correctly by TT in 2019 and all prior years that I am aware of.

[rockdoctor]

The default behavior of TT when you import 1099B is to populate the 8949s, so it simply is a bug. The user should not have to correct the behavior of the software period.

[chuck6625]

In the past, when importing the 1099-B was not available for my broker, I combined the same transactions (purchase/sale date/price) into one transaction and entered it manually. Some time I had to break one transaction into a few to match the lot.  At the end, the final numbers matched with the report.

I didn't have any issue (more/less  transactions) with it for many years until importing was available.

I am thankful for TT had made my life easier.

[rockdoctor]

This is absurd. Its like saying that you love being able to book an airline flight online but have to receive the ticket in the mail. 

[chuck6625]

Agreed.