TurboTax 2020 rounded each trade from my 1099-B upload. The cost basis/proceeds do not match my 1099-B by a difference of $18. Is this normal?

[vpeppen]

IRS rule: "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."

So, only the amounts that have to be entered on the return have to be rounded. To see what amounts have to be entered on lines, look at the Forms and Schedules TurboTax generated to be filed. Apart from Schedule D, some 8949s might be generated. On the 8949s for almost all taxpayers, there will be at most only a few transactions (transactions with adjustments, sales of stock that were acquired before 1/1/2012, CDs, SLV and GLD ETFs). All the amounts to be entered for these transactions have to be rounded according to the IRS. However, the number of transactions to be entered on these 8949s is for almost all taxpayers relatively small compared with the number of transactions that are not on these 8949s: They are entered lumped together on line 1a (ST) and line 8a (LT) of Schedule D. Nowhere in the return are the amounts (proceeds and cost) for the individual transactions that constitute the lumped proceeds amount and lumped cost amount reported on a line. Therefore, according to the IRS instructions, they are not rounded, because they are not entered on any line. The only line that is reported on the return is the sum of the proceeds and the sum of the cost, and according to the IRS instructions these sums have to be rounded. Because these sums are the result of a summation, this summation has to be done with the unrounded amounts for these transactions as stated in the strict rule by the IRS: "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total." However, TurboTax is rounding the proceeds and cost amounts before the summation, which is a clear violation of the IRS rule.

[DJG]

@vpeppen 

I hear you, but TurboTax has made up their mind about this and we're definitely not going to convince them to change it by parsing the language of the IRS instructions about rounding.  I was actually thinking a helpful next step might be to contact the IRS to hear directly from them precisely what they intend those instructions to mean w/respect to Form 8949.  Depending on what they say, we could then go back to TT to push them to change back for next year.

Otherwise, is there any reason to pay for TT Premier?  My main reason for using it has been because it makes importing brokerage transactions a cinch, but if I'm not going to be using that feature anymore...

[mjrengaw]

While clearly TT has made their final position on this issue clear everyone should take note that the this part of the position they posted - 

"When entering specific individual amounts from Form 1099-B such as Sales Proceeds and Cost Basis, the second paragraph above does not apply - as the entries are not considered by the IRS to be “two or more amounts to figure the amount to enter on a line”." - and the reference to "the second paragraph above" refers to the actual IRS instructions which state - "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."

this is a TT interpretation. Nowhere that I could find in any IRS publication or position has that been stated officially by the IRS so take it for what it's worth....

[sethaadams]

(Not) funny that TT in their infinite wisdom chooses to round these entries, but carries 1099-INT and 1099-DIV amounts to the penny, only rounding the total to the nearest dollar.  So much for consistency.

[gamer_jedi]

Yup, it's the inconsistency that is completely baffling.  There is no good reason to round the 1099-Bs until the schedule D (totals), and many reasons NOT to do this.

[pjanas]

I wish someone would get this  Schedule D rounding bug fixed before the filing deadline May 15.

This problem came to my attention with TTax 2020.  Every year I match Proceeds and Cost totals that TTAx enters in Schedule D with the numbers Fidelity Investments reports to the IRS on 1099-B.   This year TTAX is very off.   The reason?  TTax is rounding each individual sales transaction rather than rounding only the totals it enters into Schedule D.  Example, my Schedule D, Part I, line 3. col E total is underreporting my gain by $11.  I don't know what margin of error the IRS allows, but this makes me VERY nervous that my return will be flagged for audit.  I'm hoping that with the number of TurboTaxers, maybe the IRS will complain to TTAX instead of penalizing us.

[pjanas]

Thank you DJG for taking this issue to its conclusion.    In my opinion,  the TurboTax goal should be to produce IRS form entries that match what brokerage companies are reporting to the IRS.   In my case that is Fidelity Investments which at or near the top in terms of number of clients.  Are ANY brokerages doing transactional rounding when they report to the IRS?  No!   They do not round at all.   Therefore,  the most accurate number to report is a rounded total, which places them at most 50 cents off rather MANY dollars off.  Why induce the IRS to throw the red flag?