Adjusting cost basis for unknown on 1099-b

[theodorecapron54]

1099-b shows unknown in the cost basis column.  I have the cost basis.  When I follow the instructions for correcting the cost basis in Turbotax the amount appears in the "adjustment" column and the amount in the gain/loss column increases by the amount of the adjustment.  I would expect a decrease.  When I put in a "-" sign in front of the adjustment amount the calculation of gain/loss looks correct.  Should I put a negative amount in the "Total adjustments to gain (or loss)" box?

[DaveF1006]

The reason you’re seeing the gain increase is that TurboTax treats an "Adjustment" to a "0" basis as a positive addition to your profit (income), rather than a cost. Using a negative sign is a "math hack" that works, but it can lead to a red flag because it puts an "Adjustment Code" on your return that doesn't actually apply.

Here is the correct way to handle "Basis Not Reported to the IRS" (Box B or E) so the math works perfectly without negative signs:

1. If your 1099-B says the basis is "Unknown," you are likely in Box B (Short-term) or Box E (Long-term) territory.
2. In the "Cost Basis" Box: Simply type in the cost basis you found. Do not leave it at "0" and try to "adjust" it later.
3. The "Sales Category": Ensure you select "Short-term basis NOT reported to IRS" or "Long-term basis NOT reported to IRS."
4. By doing this, TurboTax simply subtracts your cost from your proceeds to find the gain/loss. No adjustment column is needed, and the IRS won't look for one because the broker already told them they didn't have the info.