My 1099-B form for sales says under Additional Information "Return of Principal". When I enter the data from my 1099-B for the sales, Turbo Tax adds the amount to my total annual income. This is not new income because the value of my account is not increased. How to I indicate that the proceeds on my 1099-B are not new income?
"My 1099-B form for sales says under Additional Information 'Return of Principal'."
If you look at the "official 1099-B" form
https://www.irs.gov/pub/irs-prior/f1099b--2018.pdf
you'll see that there's no "Additional Information" section. What you are reading is not part of the 1099-B from the broker; it amounts to some "supplemental information" that the broker has sent along with the 1099-B.
Typically "returns of capital" are reported to you in 1099-DIVs with amount indicated in Box 3:
https://www.irs.gov/pub/irs-prior/f1099div--2018.pdf
When you get this sort of information you are supposed to adjust your basis in the security in your own books and records. (As an "investor" YOU are responsible for maintaining your own records of basis and holding periods. Despite the fact that the IRS some years ago dreamed up the concept of "covered" and "noncovered" securities, your responsibility has not changed.)
If the 1099-B is reporting the sale as "covered" then, presumably, the broker has taken into account the return of capital in the basis figure reported on the 1099-B and that "Additional information" is simply the broker's way of trying to tell you that "the basis reported here doesn't equal what you originally paid for the stock because there were returns of capital while you owned the stock and those returns of capital amounted to $XXX."
Without knowing all the facts here I assume that "When I enter the data from my 1099-B for the sales, Turbo Tax adds the amount to my total annual income" means "my gain is higher than I think it should be by the return of capital of $XXX", but I really don't know if that's what you mean, or not.
Tom Young