How do I handle reporting a capital gain without 1099? Also, I had to update the cost basis of several reported 1099-B cost basis due to ESPP impact. What is impact?

[wwkhoo]

I want to how to manage reporting differently the 1099-B and avoid any audits or penalties.

[ToddL]

"Update the cost basis of several reported 1099-B cost basis due to ESPP impact. What is impact?" - Need more specifics on the changes you made to cost basis and why. By "impact", what do you mean - gain/loss?

[TomYoung · Accepted solution]

"How do I handle reporting a capital gain without 1099?"

Using the "Stocks, Mutual Funds, Bonds, Other" interview you simply tell TurboTax that no 1099-B was received and you'll be shunted into a slightly different interview than if you told TurboTax that a 1099-B was received.  These sales will be reported as "Box C" or "Box F" sales, depending on your holding period.


"Also, I had to update the cost basis of several reported 1099-B cost basis due to ESPP impact. What is impact?"

The answer depends on your particular situation.  Obviously one impact is that your basis used for the sale is increased since you added the compensation created by the sale to your out of pocket cost for the stock.  If the compensation was reported to you on a W-2 then that increase in basis is all that happens.  If the compensation was not reported on a W-2 then the other impact should be that the compensation gets added to line 7 of your Form 1040. 

If the compensation was reported on a W-2 then you can report the sales by simply selling "stock", (not "ESPP stock"), and entering the correct basis in the cost basis box; there's no "adjustment" needed as the basis wasn't reported to the IRS on a 1099-B.  But if the compensation was not reported on a W-2 then you should select "ESPP stock" as what was sold and work through the ESPP step by step interview.  At the very end of the "Stocks, Mutual Funds, Bonds, Other" interview - you're not done when you enter your trades - there's a page where TurboTax shows you the compensation it has calculated and asks if that amount is on your W-2.  You answer "No" and that amount gets added to line 7 of Form 1040.

Tom Young

[wwkhoo]

This helps in terms of handling the situation in TurboTax itself.  But how about things that I need to do with the broker?  Do I need to ask for a modified 1099-B since what's going to the IRS is not accurate?  

And for the 2nd issue on the ESPP topic, is there a way to comment in the actual tax return so that the IRS knows why there is a difference between the 1099-B and the return.  Part of the reported 1099-B gain does need to be counted as income and I have completed the TurboTax interview where it asks if the W-2 needs to be adjusted.  My answer was "yes" since the ESPP related income isn't part of my W-2.

[TomYoung]

So you DID get a 1099-B?  I guess you had two different questions going there and figured you didn't get a 1099-B for the ESPP sales.

"But how about things that I need to do with the broker?  Do I need to ask for a modified 1099-B since what's going to the IRS is not accurate? "

NO.  Brokers are only responsible for reporting your out of pocket costs.

"My answer was "yes" since the ESPP related income isn't part of my W-2."

Your answer should be "no" if the compensation wasn't on the W-2.  Answering "yes" means the compensation ISN'T added to the W-2 because you told TT that the compensation WAS on the W-2.

"And for the 2nd issue on the ESPP topic, is there a way to comment in the actual tax return so that the IRS knows why there is a difference between the 1099-B and the return."

TurboTax does that for you by putting an adjustment in column (g) and a code in column (f).

[wwkhoo]

Yes, I had 2 questions.  The first question was regarding a transaction that needs to be reported but did not have a 1099-B.  I understand that I can enter it via TT by indicating no 1099-B and enter the data manually.  My question is whether I have to chase the broker for an updated 1099-B, which I believe you are saying no.  

For the 2nd question on the ESPP, I have a 1099-B with the broker.  It's just that the calculation is incorrect and I was worried that this will trigger questions if I didn't explain.  But it sounds like TT also handles this by entering an explanation code in column (f).  So I shouldn't worry about writing something in the return.  I also reviewed TT response to the W-2 question and it was "NO".

[samd1]

my broker made a mistake on 1099 B. He reported tons of wash sales to IRS. He is refusing to change his 1099B. Is it ok if i do not report the wash sale on my return? Would that trigger an audit?

[ToddL]

"How do I handle reporting a capital gain without 1099?" - you enter it in the same interview as you would enter a Form 1099-B (see the attached screenshot examples).

[AC47]

I have this situation.  where is the interview section where I can report I did not get a 1099 B?

[EbonyA]

@AC47 Please take a look at this thread for the appropriate steps: Reporting capital gains without 1099-B.

[DaveHH]

There appears to no longer be a question "Did you get a 1099-B or brokerage statement for these sales? " At least I'm not being asked this question when following these instructions: https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/how-do-i-report-a-sto...

The stock sale I'm trying to enter is a privately held company via a broker in the secondary market. The broker specifically has said that I will not receive a 1099-B. Response was "XX does not send tax forms at the end of the year. However, everything your tax advisor should need from us is available in your transaction docs and trade confirmation."

This unresolved question appears to be the same problem I'm having.

Please let me know the new process to enter stock sales without 1099-B.

[DaveHH]

ok... and I answered my own issue:

The question of whether you received a 1099-B is no longer asked. Instead, the option is included in the drop down once you get past entering the broker name in choosing if the sale included things such as ISO. 

The options there include "long/short did not receive 1099..."