Smart check error with 1099-B from 1099-K - concert tickets

[mandyn91]

Last year I sold 2 set of concert tickets on Ticketmaster, one at a gain and the other at a loss. I added both sales and payouts on to 1099-B and they are less than the gross payment amount in box 1a. of 1099-K.  Ticketmaster did not include how much they were sold for including taxes and fees on the supplemental transaction sheet. 

Ticketmaster adds this note on the seller page where the 1099-K is found:

Note that the gross amount you see in Box 1 of the 1099-K will be different from the total of your payouts because it includes taxes and fees (as required by the IRS) and does not adjust for credits, discounts, or refunds.

Smart check gives me this error message but I don't know the full amount either set sold for. The payouts are only included in the emails I received.

Check This Entry
Form 1099-B Worksheet (Live Nation Worldwide Inc.): Amount from Form 1099-K has an amount from linked Form(s) 1099-K, but the sales proceeds on this worksheet don't match the payment amount from Form 1099-K. Add sale(s) on this worksheet with sale proceeds to match the amount reported on Form 1099-K.

How do I proceed?

[JamesG1]

I presume that you are entering the Schedule D/Form 8949 information through the IRS form 1099-K process within the software.  Then when the numbers are reported (and reported correctly), the software sees a conflict and generates an error message.  Hopefully, I am understanding correctly?

I would post the Schedule D/Form 8949 entries directly to the software and bypass the IRS form 1099-K process within the software.  IRS form 1099-K is not a form 'required' to be reported like a W-2.  Its purpose to to aid in the reporting of taxable income and that is what we will be doing.

IRS form 1099-K may be removed by selecting the trashcan to the right of the entry at the screen Your 1099-K summary.  

After removing, select Federal Review to make sure that there are no errors remaining before you proceed.

Then enter the Schedule D/Form 8949 information as described below.  The  entries will be recorded as a Personal item so a gain on the sale of a Personal item is reported.  A loss on the sale of a Personal item is not deductible.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Investments and Savings and click on the dropdown menu.
• Click Start/Revisit to the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other.
• At the screen Let's finish pulling in your investment income click Add investments.
• At the screen Let's import your tax info click Enter a different way. 
• At the screen OK, let's start with one investment type, select Other.  Click Continue.
• At the screen Tell us more about this sale, enter 'Ticketmaster - 1099-K' or some similar descriptive.  Click Continue.
• At the screen Now enter one sale, enter the first Ticketmaster transaction with the correct buy and sell information.  Select Personal items as the type of investment.  Click Continue.
• At the screen Review your sales, select Add another sale to enter the second Ticketmaster transaction.

Now you have reported the substance of the IRS form 1099-K even though you have not followed the exact process within the tax software.  In addition, make sure that your personal tax records can show the difference between what the 1099-K reported and the numbers that were reported on the Federal 1040 tax return should the IRS have a question at a later time.

[Shig2]

I am having the same issue the Smart Error Check.  It seems the error checking is trying to validate the 1099-K total proceed amount for the profitable and taxable portion against Form 8949 worksheet for the entire proceed amount including sales with loss.  It seems to me the error checking logic should be corrected.

For now, it seems I will have to delete 1099-K information to work around the issue.

Shig

[JamesG1]

Perhaps an example of a gain and a loss would be helpful.

When you enter the sales information, you will want to click the button to report the loss on sale of a personal item.  Personal items sold for less than their cost basis (most likely, the original purchase price) report $0 capital gain on line 7 of the Federal 1040 tax return.

Personal items sold for more than their cost basis report the gain on line 7 of the Federal 1040 tax return.  See this example.

                           Selling           Cost

                           Price              Basis

Tix 1                   $500              $1,000        Capital loss on personal item = $0 gain/loss

Tix 2                   $400               $300          Capital gain on personal item = $100 gain

Tix 3                   $100               $100          No capital gain or loss              = $0 gain/loss

                            $1,000           $1,400

To report Personal item sales, follow these directions.

1. Across the top of the screen, click Federal Taxes.
2. Across the top of the screen, click Wages & Income.
3. Click I'll choose what I work on.
4. Click to the right of Income from Form 1099-K.
5. Did you get a 1099-K?  Click Yes.
6. At the screen Which type of income is your 1099-K for, select the button for Personal item sales.  Click Continue.
7. At the screen Let's get the info from your 1099-K, enter the information.      Click Continue.
8. Because $600 of the selling price will not be reported, enter $600 under I sold some items at a loss or had no gain. 
9. At Your 1099-K Summary select Done.
10. At the screen Your 2024 Income Summary, scroll down to Investment Income.  Click to the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other.
11. At this screen, you will be asked to Review the Personal item sales (1099-K).  Select Review.
12.  
13. At the screen Now, enter one sale…., answer questions about the personal item sale.  
14. Because you are only reporting the gain transaction, report $400 as Proceeds and $300 as Total amount paid.
15. Click Continue.
16. At the screen, Let us know if any of these situations apply to this sale, sales expenses may be recorded.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

Capital loss for a personal item sale reports $0 capital gain on line 7 of the Federal 1040 tax return.

@Shig2 

[Shig2]

Thank you, JamesG1,

I think I figured out what's wrong with the TurboTax, and I think it needs to be fixed.  The scenario you presented is exactly what I have though I have close to 20 transactions to report to for one 1099-K, and that's what seems to be causing the problem.

I perfomed exactly the steps you mentioned except that in Investment Income area I entered all transactions including losses.  I believe this is required since IRS requires reported all the transactions including losses even though only profitable transactions are taxable and the rest are treated as zero profit.

When I do this, Schedule D shows the correct sum of all the profitable transactions (= $400 in your example), and Form 8949 on the Turbo Tax Home and Business screen Column (d) shows the correct proceeds total after adding Part I (Shor-Term) and Part II (Long-Term) totals (= $1,000 in your example) and Column (h) the correct sum of profitable transactions (=$400 in your example).  So, all tax forms look correect on the screen.

However, when I print out the form for submission, Form 8949 shows only the first 14 transactions for this 1099-K and the total is only for the first 14 transactions.  Thus, the amount in Form 8949 printout is different from Schedule D.

Smart Check which says the proceed amount in the worksheet does not match with 1099-K ($500 in your example) even though they actually match for the taxable amount.  I initially thought it was comparing taxable 1099-K portion against the total worksheet amount including loss transactions.  But it now seems to me the error due to 15+ transactions for the same 1099-K.

Shig

[SusanY1]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[Shig2]

Hi, SusanY1,

I sent out the diagnostic file to Turbotax.  My token number is:  56740424 84257750. 

Best regards,

Shig

[SusanY1]

Thank you for sending across the diagnostic.  To resolve your issue, you will want to edit the proceeds on the 1099-B entry for the ticket sales to match the amount on the 1099-K.   You can then adjust either the cost basis or "expenses".  

To adjust expenses on the screen "Let us know if any of these situations apply to this sale" check the box "I paid sales expenses that aren't included in the sales proceeds reported on the form" and adjust there.  

TurboTax won't proceed unless the 1099-K amount matches the proceeds here - and adjusting in this way will get you to the correct profit/loss for your ticket sales.  

[Shig2]

Thank you, SusanY1, for looking into my file.

I adjusted the cost basis for the loss transaction to zero cost in 1099-B and updated 1099-K loss amount accordingly.  Then, Smart Error Check no longer gives an error.  

How do I adjust the cost basis after that?  If I change the cost basis back to the correct onse in 1099-B and 1099-K, I get the same error.  Should I leave the 1099-K loss amount as zero assuming the 1099-K information doesn't get sent to IRS?

Best regards,

Shig

[JamesG1]

When reporting personal item sales, the amount of the IRS form 1099-K  (see here)

must equal the Proceeds for the sale reported on the IRS form 1099-B.  See here.

The cost basis within the IRS form 1099-B should reflect the actual cost.  

You may also report expenses by selecting I paid sales expenses that aren't included in the sale proceeds reported on the form at the screen Let us know if any of these situations apply to this sale.

[Shig2]

Thank you, JamesG1,

I was able to remove the Smart Check error by adjusting the 1099-K information to match with 1099-B.

Best regards,

Shig