Turbo tax does not allow negative numbers in 1099-B box 1d
Some brokers now reports losses of short options on 1099B as a negative number for proceeds in box 1d and a zero value for cost basis, rather than separate values for cost basis and proceeds that show a loss.
The broker explanation is: "We are now updating our reporting of short options on the 1099-B to reflect how the IRS is now requesting that these transactions be reported. In this new format, the cost basis and proceeds for short options is consolidated into Box 1d in a net amount."
To be able to post a negative value to form 1099-B box 1d follow these steps.
From <https://turbotax.response.lithium.com/console/agent/5784093?>
Turbo tax does not allow negative numbers in 1099-B box 1d
Some brokers now reports losses of short options on 1099B as a negative number for proceeds in box 1d and a zero value for cost basis, rather than separate values for cost basis and proceeds that show a loss.
The broker explanation is: "We are now updating our reporting of short options on the 1099-B to reflect how the IRS is now requesting that these transactions be reported. In this new format, the cost basis and proceeds for short options is consolidated into Box 1d in a net amount."
To be able to post a negative value to form 1099-B box 1d follow these steps.
From <https://turbotax.response.lithium.com/console/agent/5784093?>
Manually enter 1099B defeats the very useful feature of Turbotax to be able to download form from your broker.
I have around 50 short puts sales and only around 10 of them have negative numbers.
Why should I enter all entries if only some of them Turbotax doesn't like?
This is IRS requirements and Turbotax must follow them. Program must be corrected immediately.
By the way 2019 Turbotax didn't have this problem.
Another issue with download short options sales is user will have to manually type zero in cost basis box even though zero was received from the broker already.
Before program permanently fixed maybe Turbotax should allow to override negative values in Sales Proceeds.
Hi @John, thanks for the information. I have a question regarding fixing these entries. Is this a possible workaround/correction for the negative short options data? When looking at the 1099-B Worksheet, instead of having the negative figure in "Sales Price (Proceeds)" field, could that amount be moved to the next field, "Cost Basis", and have the "Sales Price (Proceeds)" field be changed to 0? In my mind that would provide the same "Loss", but want to confirm prior to changing the 186 entries that have errors.
Thank you!
The error messaging you are seeing is a result of automatic rounding of the number imported from your broker or typed in by you. If the transaction is $0.49 or less, then it is automatically rounded to zero. This type of rounding is allowed by the IRS. Unfortunately, zero is not a valid value for this field -- thus the error message.
To resolve the issue, you can edit each individual transaction and delete the amount it is $0.49 or less. This will clear the error message.
To do this, you will need to revisit the input section for the Form 1099-B transactions. Use the following steps:
the IRS has provided clear language that instructs us to round up when the amount is 50 cents and over, and down when it's 49 cents and lower. It isn't considered fudging because this is the way they want it done.
Rounding
Here is the guidance from the IRS: https://www.irs.gov/publications/p17/ch01.html
Computations
The following information may be useful in making the return easier to complete.
Rounding off dollars.
You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.
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.
Information on our tax return must match to information IRS received from the broker.
Here is IRS instruction for 1099-B:
Box 1d. Proceeds
Enter the gross cash proceeds from all dispositions (including short sales) of securities, commodities, options, securities futures contracts, or forward contracts. Show a loss, such as one from a closing transaction on a written option or forward contract, as a negative amount by enclosing it in parentheses.
And this how my 1099-B looks like from T. Rowe Price. I am sure I have to report it the same way.
Any adjustments will cause mismatch at IRS and trouble for us.
I am seeing 2 different "fixes" from the TT staff for this issue. I really think there needs to be one solid answer given. @AnnetteB6 has been saying to eliminate negative numbers based on updated IRS requirement while @ReneeM7122 is saying to round numbers up or down.
Can TT staff get on the same page to give the single correct answer for this situation?
Please see this response from TurboTax Expert ToddL99 to a similar question: [I am getting an error on my 1099-B because my proc...]
The IRS (and TurboTax) will not accept negative numbers in either the cost basis or proceeds fields. You will have to manually edit any imported negative entries in order to proceed with e return and e-file.
Starting with the 2020 tax returns, the IRS will reject any return filed with a negative number reported in the proceeds or cost basis fields for Schedule D. TurboTax is flagging these situations ahead of time before the return is filed in order to prevent the IRS rejection. Some brokers are still using the old convention for reporting negative values and have not updated their reports to match the IRS.
The error message reported by TurboTax is telling you that the number entered cannot be negative.
Gains from expired options are reported by entering the gain amount in the proceeds column and no amount in the cost basis column. This will result in a gain.
Losses from expired options are reported by entering the loss amount as a positive number in the cost basis column and no amount in the proceeds column. The end result here would be a loss.
No negative numbers should be entered in either the cost basis or proceeds fields.
If negative numbers have been imported through your brokerage statement, you will need to edit the entries to make the correction.
So far Turbotax won't allow to manually edit imported entries.
Also, IRS requires brokers to enter losses in option trades in box 1d as negative numbers by enclosing it in parentheses.
@ngozman That's not true. I have been doing it all morning. I have 186 of these showing as negative in the Proceeds field. I cannot post a picture, so I will try to explain as clearly as I can.
TT prompts me in a few different areas of the return, most commonly at the end, when I hit "Transmit Returns". I am then brought to a message that says something along the lines of "There are a few things that need attention". It then brings me to the first trade with a negative # in the Proceeds field. If you click on "Forms" at the top, it will switch to the Forms mode. From here, on the left section of the window, it will display all the trades. One of the headings is "Errors". Click on that, and it will highlight all the errors within the respective forms. At the bottom of the window are arrows that let you go to the next or previous error.
What I have been doing is cutting the number in the error amount (negative proceeds), changing that field "Sales Price Proceeds" to 0, then pasting that number into the "Cost or Other Basis" field, after removing the "-" symbol. This changes the entry from a negative gross proceeds amount with a 0 cost basis to instead a cost basis of the loss, with proceeds as 0.
In the end this does fix the problem and the loss or gain remain the same in column h on schedule D but I want to confirm that this alters the Schedule D columns d and e on the reported form to the IRS. Will the irs question the different numbers in Proceeds column and Cost column?
I can't believe that such big and respected company as Intuit left users with such manual fixes instead of programming it. It is so easy to do everything programmatically. The same is true for TT asking you to enter zero in the cost basis field and specify short or long term transactions. All this information is provided by broker.
I am wondering if other tax softwares like Tax Cut do it differently.
My main concern is that IRS would accept such massaged data which is different from whatever it received from broker.
2020 Turbo Tax has a software bug which prevents completion and Efiling unless all negative entries on forms 1099B Worksheet for various stock transactions are eliminated. These entries are generated by the electronic import from the Customer's Brokerage firm (in my case Fidelity). This problem is only revealed to the customer in the "Review Phase" of the Federal Return by a simple "Error" notification "The price is outside prescribed limits ...". No explanation is provided as to what the problem is nor are there any instructions or guides-references for how to fix it. Only after going to this TurboTax "Support Online Forum" and searching for the notice does one see a description and possible solutions/options from unofficial users. The solution is to manually swap out the "sale" & "proceeds" columns one by one to eliminate all the negative numbers. Depending on the user's stock trading activity this could be hundreds of trades. n my case it was 18. Also it has to be done very carefully and scrupulously so as to be sure the "Before" &"After" totals for gains/losses are the same. Otherwise the entries on specifically Form D and through that to other forms on the return will be altered. TurboTax has known of this problem for a long time and certainly has had plenty of time to implement a quick and easy program fix. Certainly they should have communicated this to their customers at the outset of the program. The fact that they didn't is a significant defect which renders the program virtually useless especially for any Tax Professional" (I'm not)l who uses it for customers. The number of entry corrections could easily be thousands and ultimately millions across all users It is shameful and inexcusable for Intuit to have failed in this manner. I have liked/used Turbotax for many years. I won't use it ever again.
I'm with you @Dewy67 . I've spent well over 12hrs manually fixing these. Chalk it up to stubbornness or the sunk cost of having committed so much time as the reason why I have just not thrown in the towel. No reason at all that a service provider that supposedly is designed to simplify users' lives is doing the exact opposite. Very very disappointed in TurboTax.
And to those that say "Hey its on the brokers for submitting those erroneous data in their file transfers": TurboTax could very easily code any negative figures in box 1d to be an inverse in 1e.
Another possible solution: let users download csv files of these transactions so that we could make the changes on one sheet to then upload back into TurboTax. But nope. Instead we sit while the program crawls along at the speed of an MS-DOS machine.
*rant over*
P.S. Anyone have H&R Block's phone number?
I just talked to IRS representative and she said that I could enter real cost basis and real sales proceeds for such trades. Net result will be the same and in case of any questions from IRS I can substantiate my entries.
My broker (t. Rowe Price) actually provide this info on 1099B in the note below every entry.
Description (Box 1a): PUT NETFLIX INC COM 04-17-20 425.00 CUSIP: 99QAQ8A6R
BUY TO COVER 10 04/16/2020 04/17/2020 (3,390.74) 0.00
Actual Proceeds: 2,629.60, Original Cost: 6,020.34, Realized Gain or (Loss): -3,390.74. The IRS requires reporting as displayed above. See the instructions for this section for more information.
Has anyone transmitted corrected return to IRS? Was it accepted?
Yes. I performed the changes (swap proceeds with costs and eliminate "-" sign) on the 18 entries I had. I verified that the return(s) was unaffected e.g same same final results. I E-Filed the FED & State forms 2/16 AM and they were both "accepted" and the taxes due have been deducted from my bank. So I guess that works.
I do had my return accepted by the IRS after making the changes. All 186 of them. And yes it was as frustrating as you can imagine. What a waste of time (and money paying for a product that FORCED me to do such an extreme amount of editing of their own inept software).
If your TT program is running slowly after uploading your 1099 information from your broker, I would advise you do not manually edit like I did. It took WAY longer than I anticipated.
Today I ran TurboTax update and got no errors in my return at all. Still have negative amounts in proceeds field but now it is accepted by the program.
That is good to hear. I am glad they got their act together and fixed it for everyone.
Would have been nice if they conveyed to us that there was in fact going to be an update instead of telling us to manually change everything. I'm all done already, but am glad that everyone that is having the issue has been given the fix.
Is it wrong to hate turbotax on a chromebook where you get this error message and turbotax goes on the circle of death when you try to access form 1099B worksheet? I must have spent 5 hours going one by one through all the puny stocks looking for anything where there was either a cost basis left blank or negative. Can I pay for the stupid turbotax which I knew wasn't going to be free and then access the form? Yes. Then I get to go through page after page of stuff just to see that there was one $30 investment bought and sold the same day. Into the trash it goes and now no error message. Does turbotax ever try their product out on anyone reasonable intelligent (masters in math) to see if there need to be improvements?