Short vs Long Term Gains when using Multiple Brokerages

[Ankin]

When providing multiple 1099-B provided by different brokers like Robinhood or Schwab, etc, is long term and short term capital gains calculated across all brokerages?

Say one is using FIFO (First In, First Out). That person sells 10 shares of ABC stock on 11/10/2021 with Robinhood which they bought on 6/10/2021 but they also bought 10 shares of ABC stock on Schwab back on 5/5/2020. Does TurboTax reference the 10 older shares on Schwab as its basis for tax purposes?

If only referencing Robinhood, this would show as a short term gain.

If referencing across all brokerages, this would show as a long term gain.

[Critter-3]

Does TurboTax reference the 10 older shares on Schwab as its basis for tax purposes?   Of course not since you did not sell those shares.  FIFO system only works when you complete the sales in the same broker account.  

ALL sales from ALL sources will end up on the SAME Sch D on the return and be netted against each other. 

[Ankin]

And compare the older purchase dates?

[Critter-3]

Basically if you wanted to sell the older stock you should have done so in the broker account where they were housed.  Since you sold the newer stock in the robinhood account then that is what will be reported to the IRS. 

The IRS will not compare your purchases with your sales if that is what you think ... they rely on the broker to report the sale on the 1099-B and that is what they go off of.   If you choose to change what the broker sends to the IRS then be prepared to prove your entries if the IRS audits you. 

[Ankin]

That's how I'm figuring it. The stocks are not fungible across all platforms.

Trades in Robinhood would be based on the dates of those position for both long and short term gains within Robinhood; whereas trades on Schwab would be based on the dates of those positions for that platform.

This the issue, I'm looking at with regards to stocks and managing tax harvesting strategies.

In crypto things tend to be a little more fungible across wallet addresses for the purpose of tax basis.

[fanfare]

The wash sale rules apply across all broker accounts you may be using including tax-deferred accounts.

For purposes of the holding period, you can use the buy-date of any shares you want, but then may have to explain the mismatches on your 1099-B documents to the IRS.

This would be a record-keeping nightmare. and is not worth the effort involved. 

[rjs]

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@Ankin wrote:

The stocks are not fungible across all platforms.

Trades in Robinhood would be based on the dates of those position for both long and short term gains within Robinhood; whereas trades on Schwab would be based on the dates of those positions for that platform.

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That is correct. That's the way it works.

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@Ankin wrote:

In crypto things tend to be a little more fungible across wallet addresses for the purpose of tax basis.

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I don't know why it would be any different for crypto. It might be "a little more fungible" in your mind, but the same principles apply. Cryptocurrency is treated the same as stock for tax reporting purposes.