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cedar995
Level 1

undetermined term transactions for noncovered tax lots

Got a 1099-B with monthly proceeds which totaled $7.17. No quantity of shares listed, no cost basis. A "cost basis factor" was given for each month which averaged about .0004.  What do I use for a cost basis? Stock acquired in 2010 for $29/share. Thank you.

10 Replies
JulieS
Expert Alumni

undetermined term transactions for noncovered tax lots

If you are not able to determine the amount of stock that was sold, you may have to list $0 as your basis. 

 

Before you do that, look carefully at the details of your 1099-B statement. A typical 1099-B has very little information on the 1099-B form, especially for the noncovered securities.

 

But further back in the details, sometimes you find all the information that you need. Start by checking the Box for this transaction, it should be E, based on what you said, so it will be near the back of the detail statements.

 

You will probably find the fractional amount of shares sold and maybe even the cost basis for these transactions.

 

If it turns out that .0004 is the amount sold, that will come out to just over 1 cent basis, so it will round down to $0.

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cedar995
Level 1

undetermined term transactions for noncovered tax lots

Thank you. I'm still confused. I have not sold any of this stock. It is SLV, a trust. On one part of the consolidated 1099-B it lists for every month (see below)

Date sold or disposed, Quantity, Proceeds, Date acquired, Cost or other basis, Additional info

01/31/19, 0.000, 0.59, N/A, Cost basis factor 0.0000414000

.

.

Later on in the 1099-B, under Fees and Expenses, it gives monthly dates

Date, Amount, 

01/31/19, -0.59

.

.

For each of the months, the "cost" is exactly the inverse of the "proceeds." So the total proceed is $7.17 and the total fee is -$7.17. 

I spoke with someone at TD Ameritrade who said the $7.17 was "return on capital" but that made no sense to me. 

Please advise. Thank you.

 

DaveF1006
Employee Tax Expert

undetermined term transactions for noncovered tax lots

 

Form 1099-B - Return of Principal Return of Capital. .However, if the return of capital or principal is more than your basis, then you will need to report a capital gain equal to the amount received in excess of your basis.  They sent you this statement because as a result of return of capital, your capital gains is $7.17. This may have been a result of a reinvested dividend.  You might also look at your disclosure information in the brokerage statements if they sent you any. Anyhow, it sounds like the capital gains was negated by the investment expense.

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ja 102
New Member

undetermined term transactions for noncovered tax lots

I have a 1099B principal payment for $9.29 and expenses for the same amount.  There is a Costs Basis Factor in additional information, but there is not cost basis amount listed in the column.  There are several lines listed for individual months.  Do I use the cost basis factor multiplied by the current cost of the stock to figure out the cost basis?  Or, do I just use a zero cost basis and put in the expense amount?

MaryM428
Level 6

undetermined term transactions for noncovered tax lots

Cost basis is the original value of an asset for tax purposes, usually the purchase price, adjusted for stock splits, dividends, and return of capital distributions.  You do not have to use zero as the cost basis and can calculate the cost basis by using your records or any historical records that show the cost of asset when you purchased it and any events that affected the basis of the stock.  

 

You are taxed on the difference between the proceeds and your cost basis. When you use zero as the cost basis, you are paying taxes on the entire amount of the proceeds.

 

fanfare
Level 15

undetermined term transactions for noncovered tax lots

I'm sorry you have a security whose tax implications you do not understand.

Your broker won't give tax advice.

You'll have to keep googling until you figure it out.

You're definitely not going to get correct information from the "TurboTax Experts" on this forum.

taxconfused3
New Member

undetermined term transactions for noncovered tax lots

In a similar situation.$6.19 proceeds with no cost basis and no net returns resulting in a taxable situation. As @DaveF1006  mentioned, the gains are offset by investment expense of the exact same amount. 

 

Have you been able to figure it out @cedar995 ?

 

This is super confusing and would appreciate a CPA chiming in but it seems that turbotax doesn't hire any CPAs.  Would hate to be flagged for a $6 mistake.

 

~Confused

 

AmyC
Employee Tax Expert

undetermined term transactions for noncovered tax lots

@cedar995  you list quantity sold as zero. Your basis equals cost. @DaveF1006  is correct. Return of capital is a negated amount for you. It is simply returning some of your money to you.

 

@ja 102 @MaryM428 is correct when she says that if you don't know the cost basis, zero is correct. In fact, that is what the IRS requires when the basis is not known.

 

See Publication 551, Basis of Assets

 

@taxconfused3 this site is answered by CPA and EA experts so if you have accounting or tax needs, we are here. You  will not be flagged for a $6 mistake. The safest answer when dealing with the IRS is zero - if you do not know the basis. If your broker replies the same as @cedar995 that it is return of capital, then it is not taxed.

 

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KJM7
Returning Member

undetermined term transactions for noncovered tax lots

If the cost is 0 because it's unknow to me. what should I put for how did I receive this investment?

Purchased it? Inherited it?

KJM7
Returning Member

undetermined term transactions for noncovered tax lots

should I also check the section "The cost basis is incorrect or missing on my 1099-B"?

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