I had 4 brokerage accounts. I closed 2 during 2020. I was able to import 1099B's into TurboTax for the 2 active accounts. For the closed accounts, I was unable to import into TT. So, I checked the box and used the "summary transaction" method of reporting about 15 transactions.
Everything was going well until I e-filed, at which point form 8453 was generated requesting form 8949 with supporting documentation (1099B's) for the 2 ACTIVE accounts, which were successfully imported into TT, but not for the 2 closed accounts I used the "summary transaction" input method. This seems counter-intuitive.
Unfortunately, my 2 active accounts had many trades, and I now have 6 pages of 8949's with 40 pages of 1099B's to send to the IRS. Is this the way the program is supposed to work? I should think the IRS would want to see details on the summary transactions...not the imported transactions!
It does create some confusion. And you are correct, the IRS will want to see the detail on the summarized transactions. Definitely include the summary transaction detail as well. When everything is imported, you can check to see if your Form 8949, for the imported transactions, actually shows all the detail. As you can imagine the number of transactions for this type of income can become extremely detailed and with a high volume.
Either way, it's a good idea for the IRS to have the documentation and should help to eliminate questions later.
If you are e-filing your tax return, then mail your statements along with Form 8453 to the following address within three days after the IRS accepts your tax return:
Internal Revenue Service
Attn: Shipping and Receiving, 0254
Receipt and Control Branch
Austin, TX 73344-0254
Diane,
Actually, I think I figured this whole issue out--
Whether you use the summary method to input 1099B information, list each trade individually, or you import the transactions successfully from your broker, it's all about the SALES CATEGORY...that is, Box A thru F. Successfully importing 1099B transactions from a broker should populate the sales category correctly.
If your manually keyed in transactions or summary 1099B transactions indicates a SALES CATEGORY of B,C,E or F (all of those are either "non covered" or "not reported"), just before you hit the DONE button after keying in your data, the program indicates "to finish reporting these sales, follow the mailing instructions" with a link to some confusing (until you figure this all out) instructions. But if your sales category is either A (short term covered) or D (long term covered), you don't "see" the mailing instructions and don't have to complete a form 8453 (unless, of course, your imported data surprises you by indicating something besides sales category A or D).
Finally, you only need to print the 8453 to send to the IRS along with the particular 1099B that has the trade(s) with sales categories B,C,E or F. You do not need to print out form 8949 listing all your transactions. They're waiting to see just the statement of non covered or not reported transactions. Nothing more.
Once I figured this out (the culprit was Bitcoin trades on Robinhood...you can't import the crypto 1099B and the sales category happens to be B--short term non covered), I realized that all I need to do is send a copy of that particular 1099B and a copy of the form 8453. That's it.
Again, all my summarized transactions, manually input individual transactions, and imported transactions (from broker) had "short term covered" (sales category A) or "long term covered" (sales category D), which does not require supporting documentation to be sent to the IRS. JUST the Bitcoin trades were "not covered" or "not reported".
I appreciate your time and explanation of the details that led to your conclusions. It does make sense that the non-covered (basis not reported to the IRS) transactions would trigger any paper filings for Form 8949 so that the IRS has the detail to take a deeper dive should they choose.
Thank you @Mark L