Reporting 2021 Bitcoin Transactions on Schedule D

[premmer]

I made a few buy/sell transactions during the year and realized gains.  Assuming the broker reports all transaction cost basis to IRS, I planned to import the transactions to Form 8949 and carry over the required totals to Schedule D, Part 1, Line 1b as they all were short-term. All transactions were made within one account.  This is a first for me, reporting bitcoin transactions; is there any issue with my approach of reporting the transactions?

[ThomasM125]

Your approach is sound, but there are some things you need to keep in mind. In order to download your broker statement to TurboTax, it would need to be in the form of a 1099-B. After you download the information, you need to review the entries, with particular attention to the cost basis of your transactions, as they are not accurately reported sometimes.

Sometimes Bitcoin sales are reported on a form 1099-K. If this happens, only the sales proceeds would be reported, so you need to enter those transactions manually and determine the cost basis to be reported.

[premmer]

Thank for your comments; I will keep them in mind.  I did log each buy/sell transaction manually on an 8949 as they occurred. The broker just provided me a .csv spreadsheet of my 2021 transactions.  The amounts they reported agree with my 8949 numbers; hopefully their 1099 will be the same.

From what I’ve read, it will be ~ mid-Feb before I receive the broker 1099. I did convert the broker .csv file to. txf format and plan to import it into a 1099B group. If the broker amounts need to be adjusted, the .txf file values can easily be changed.

If their amounts need adjustment, is it something I can do or do I have to get the broker to re-issue their 1099?

[ThomasM125 · Accepted solution]

You don't need to re-issue the 1099 unless it reports incorrect gross proceeds. Broker statements routinely report the wrong cost basis or often no cost basis, so the IRS is used to the cost basis on 1099 forms not matching the items reported on your tax return.