Form 1099-B errors that involve wash sale adjustments

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TurboTax returns on error on five of my 1099-B forms that I can't fix. These all are short term covered stock sale transactions that involve a loss where the Proceeds and Cost Basis are within a small dollar amount of each other. Turbotax rounds those to the nearest $$ and calculates an adjustment amount of $0 when the adjustment code (W) says it should show a loss. This creates an error in the form and during checking of the return. Is there a workaround for this error or should I just ignore them?

AnnetteB6

Employee Tax Expert

The error messaging you are seeing with regard to the wash sale entries is a result of automatic rounding of the number imported from your broker or typed in by you. If the wash sale adjustment 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 (although not from the screen in the review process) and delete the amount entered in the wash sale adjustment if 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:

On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
This opens a box where you can type in “1099-B” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
The search results will give you an option to “Jump to 1099-B”
Click on the blue “Jump to 1099-B” link
Click Edit beside the institution name
Click Edit beside each transaction that contains a wash sale adjustment amount of $0.49 or less
Delete the wash sale adjustment amount and click Done

If you have too many transactions that would require editing, you can consider deleting your imported information and entering a summary of the different categories of transactions reported on your Form 1099-B (short-term covered, short-term not covered, long-term covered, long-term not covered). This may require you to mail a copy (not the original) of your Form 1099-B from your brokerage to the IRS within three days of filing your return. The Form 1099-B would be attached to Form 8453, which will print with your return.

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JHN_FlagAuthor

Level 2

Thanks for that quick reply.

I am using the desktop version of Turbotax (Premier). The worksheets for 1099-Bs are all viewable and were populated by data imported from a brokerage firm account - I did not input them by hand. The only 2 editable fields on those 1099-B worksheets are "Sales Price/Proceeds" and "Cost Basis". All the other worksheet fields are calculated which due to rounding and subtraction results in an adjustment amount that is zero (flagged as an error for a transaction with an adjustment code of "W").

It seems the programming for Turbotax needs to be adjusted to recognize this situation so these type of transactions are not flagged as errors on the return.

JohnB5677

Alumni - Intuit

The error message you are seeing on the wash sale entries is a result of automatic rounding. If the wash sale adjustment 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 for TurboTax, thus the error message.

To enter a disallowed Wash sale:

Income & Expenses

Scroll to Stocks, Mutual Funds, Bonds, Other
Answer Yes to Did you sell stocks, mutual funds, bonds, or other investments in 2020?
On the OK, what type of investments did you sell? screen, select Stock, Bonds, Mutual Funds. Then select Continue.
From here, you can import or manually enter your 1099-B.
Answer the questions about your sales. Choose to Enter sales one by one when asked.
On the Now, we'll enter one sale on your 1099-B screen, enter your info.
Check I have other boxes on my 1099-B to enter and enter the disallowed wash sale loss in box 1g.
Select Continue and answer any follow-up questions.

Note: You'll need TurboTax Premier, TurboTax Live Premier, or TurboTax Self-Employed, TurboTax Live Self-Employed, to add any 1099-B forms.

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hossahunter22

Level 2

I have 416 edits to make because of this *stupid* software glitch. It takes about 2 to 3 minutes to edit each as you have to wait for it to load in each time. I hate you turbotax. You are turbo WACKs....