Sending wash sale data to the IRS

[BrimstoneFox]

Hi,

TurboTax Premier appears to be only able to import about 2500 transactions from Etrade so I just entered my summary information but because I have wash sale data. I get a link at the end saying "To finish reporting these sales, please follow the mailing intructions" clicking on that yields:

Mailing Instructions

Take a moment to double-check that your statements are complete. For each sale listed, there should be:

 - A Description
 - Date Acquired
 - Date Sold
 - Sales Price
 - Cost Basis
 - Gain or loss for each sale
 - A sale category based on how the sale was reported to you and the IRS

In some uncommon cases, there will be an adjustment code and adjustment amount.

NOTE: Any sales summaries that include only Box A or Box D sales, and which have no adjustments to gain/loss, do not need to be included on a statement mailed to the IRS.

Here's how to mail your statements:

If you are e-filing your tax return, then mail your statements along with Form 8453 to:

 Internal Revenue Service
 Attn: Shipping and Receiving, 0254
 Receipt and Control Branch
 Austin, TX [removed]

If you are not e-filing, then mail your statements with your entire tax return to your local IRS office.

My full 1099-B is 457 pages, the relevant portion of the 1099-B is still over 250 pages, mailing all that is out of the question it states I only need to include wash sale information, which is still scattered over the 250 pages, even printing only the affected pages would be over 50, do these need to be on a specific form, or could I just basically copy the 1099 data into an excel sheet and print only the relevant data? (I imagine it would be just a couple pages then).

[JohnB5677]

No, I do not recommend sending an Excel spreadsheet unless you want to include it as a supplement.  At a minimum, you will have to include copies of the summary pages for each transaction summary posted to the tax return.

You have to send the summary statements, not copies of individual 1099-B forms. 

You can still E-file.  TurboTax will produce a Form 8453. You will print the Form 8453 and attach the brokerage statement(s) to it. 

If you file by mail, attach the statement(s) at the back of your tax return, behind all the forms and schedules.

[BrimstoneFox]

NOTE: Any sales summaries that include only Box A or Box D sales, and which have no adjustments to gain/loss, do not need to be included on a statement mailed to the IRS.

So I only need include a hardcopy single page (maybe 2) that is related to the summary statement contained in my 1099-B (that is basically the summary data that I entered into TurboTax)? and the individual transactions DO NOT need to be mailed to the IRS at all?

[Mike9241]

when the IRS wants details

all A or D type trades if there are adjustments such as wash sales (not sure why because the wash sales are reported to the iRS)

all B & E type trades because cost basis is not reported to he iRS

all C and F type trades because neither proceeds nor cost are reported to the iRS.

if you provide inadequate detail, you may be filing an incomplete return which would extend the statute of limitations for the IRS to assess a deficiency

excel is not advisable since it may miss certain info which is the same as filing an incomplete return.

[BrimstoneFox]

I'm still confused.

1. It says I do not need to send my 1099-B in (is this correct?)

2. Assume the answer to 1 is yes, what do I send in its place to report the wash sale data? (its about 950 lines of data for all the transactions on the relevant securities and about 230 specific rows in the 1099-B)

There is actually less risk of me doing it incorrectly in Excel (because I can easily validate the numbers add up correctly) vs. having something go awry from trying to print hundreds of pages. (and the risk difference is not even close)

[JohnB5677]

You make a valid point.  I recommend that you contact a local IRS office and make an appointment.  You can then confirm exactly what information they need.  Bring a copy or a second printing of the 1099-B.

Visit a Taxpayer Assistance Center Local IRS Office.

[BrimstoneFox]

FWIW to anyone reading this I just efiled and mailed the excel generated wash sale data to the provided address and got my return in a timely fashion.

[fanfare]

@BrimstoneFox 

Too bad so much off-base misleading misinformation on this forum ...

IRS requires detail on some form 8949

or other forms with the same information and in the manner of Form 8949.

An Excel spreadsheet is perfectly acceptable.

Put a header with your name ssn and tax year.

As you pointed out, you only need to supply details of 1099-B covered transactions with adjustments (e.g. wash sales)  that are not listed on your e-Filed Form 8949. and all non-covered transactions not listed there.

--

If you are in the mood to invest the time and energy, and have a small number of wash sales.

you can enter wash sales manually into your e-Filed Form 8949.

Then you have to adjust the summary totals on Schedule D Line 1a.

No mailing is necessary.

[MFH_IMMATERIAL]

Thanks! This is really helpful for someone trying to figure out if the extra mailing cost and effort is justified only to report a <$6 gains adjustment for wash sales.

Especially if it is a wash adjustment to add gains to reduce a net loss. Why would a taxpayer bother making something like that up? It seems a giant waste of everyone's time and energy to care about the details of a wash sale adjustment resulting in an outcome IN FAVOR OF the government. 

[JohnB5677]

There is an alternative in TurboTax to attach a PDF.

1. Wages and Income
2. Scroll to Investments & Savings
3. Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) [Start or Revisit]
4. If you already have an entry, select the appropriate broker or add another account.
5. Get ready to be impressed - Continue.
6. Click Enter a different way.
7. Stocks, Bonds, Mutual Funds - Continue
8. Enter Broker - Continue
9. Tell us about the sales on your FSC eQuipt 1099‑B
   1. Do these sales include any employee stock? - No
   2. Do you have more than three sales on your 1099‑B? - Yes (4+)
   3. Do these sales include any other types of investments? - No
   4. Did you buy every investment listed on your 1099‑B? - Yes
   5. Continue
10. Choose Sales Section tools - Continue
11. Look for your sales on your 1099‑B - Continue
12. Post your sales
13. This will close the record
14. Continue to screen Now we'll help you upload your 1099-B since the IRS requires a copy
15. Browse and select your document
16. Document will show in TurboTax - Continue
17. This completes the process
18. When you upload your document, your filing instructions will not show that anything needs to be mailed in, and no Form 8453 will be generated.

[fanfare]

@MFH_IMMATERIAL 

The above is how I report Wash sales because I only get a few each year.

if you have a mutual fund that reinvests monthly interest or you contribute automatically, that might trigger a wash sale if you sell some shares.

the other option I have used is to cut and paste the Wash Sales from the 1099-B PDF.

and remove the transactions with no adjustments. Then print that and mail it.

That was tedious but I did not want to mail the entire consolidated 1099-B which is not called for.

This would be even easier if you have PDF editor.

[fanfare]

" It seems a giant waste of everyone's time and energy to care about the details of a wash sale"

It is not only wash sales.

IRS requires you to supply details of 1099-B covered transactions with adjustments (e.g. wash sales)  that are not listed on your e-Filed Form 8949. and all non-covered transactions not listed there.

non-covered are Box B,C and E,F

Detail Reporting Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary.

This is the only exception.