undetermined term transactions for noncovered tax lots

[cedar995]

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.

[JulieS]

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.

[cedar995]

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]

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.

[ja 102]

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]

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]

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]

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]

@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.

[KJM7]

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]

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

[Jared16]

I have entered the fractional cent value, but I cannot get past the "needs review" flag. There is no date acquired, only "N/A". There are 7 transactions of either $5 or $6 which amount to $40. I cannot see how to remove the flag and proceed. This is such a trivial amount, is that a problem?

[msb2]

I have the same issue with two ETF's (SLV & GLD).  In calling Vanguard to ask the Acquire date (it's been a long time ago ... 2007), they indicated that the monthly "Proceeds" for 1099-B Part I w/ Box B cked (or Part II with Box E cked) listed as 1d - Proceeds & Reported Gross/net were actually the Monthly fees for the ETF.  They are NOT related to Dividend Reinvestment (at least in my case since I do not do that) Talking to a CPA, "On page 1 or 2 of the Vanguard 1099 statements there should be a line item for "investment expenses" attributed to the precious metals accounts. These are fees for storage, insurance, etc. for the fund. The basis to put on schedule B for the iShares Silver ETF is the sum of the investment expenses.".  Looking at p2 of the Vanguard 1099-B "Reconciliations, Fees, Expenses and Expenditures", there is indeed a line "Fees & Expenses - Other expenses" which is exactly the sum of all those 1-d Reported Gross monthly lines.  The Vanguard customer service rep acknowledged that this was the first year that Vanguard reported the ETF fees this way which is perhaps why Turbotax is not so helpful in explaining what needs to occur.

Since the Qty of SLV (or GLD) every month "sold/disposed" was listed as exactly "0.000", and the total Expenses listed for SLV + GLD equaled my 1-d Proceeds, it appears that the logical answer would actually be to put the "Proceed" amount (since Expenses = Proceeds) into the Cost Basis amount in Turbotax, effectively zeroing out any income.  Looking at the sweep fund for the account, there were NO cash transactions in it related to the two ETF's. 

However, the question remains if that is really a good thing to do.  Technically it appears to be correct, but the footnote 16 regarding the Cost Basis Factor (typically a very small number near 0.0004) times my actual basis in 2007 does yield a reasonable number (about 50% of the 1d Proceeds) but since there is absolutely no Quantity listed, I base that simply on approximately a doubling of the ETF since purchase.

The "safe" answer is to list as short-term, and put $0 as basis.  For a $184 gross proceed (= expenses), I doubt it's worth triggering an IRS letter asking for explanation.  Nonetheless, it would be interesting to hear what Intuit's CPA's have to say upon seeing this information.

[RaifH]

The cost basis for the sales to cover expenses can be determined from this document for GLD and this one for SLV. 

If you take the number from the third column and divide it by the second column, that will give you the fraction of the commodity used to cover expenses. Multiply that by your total cost basis to get your cost basis for the sale.

Then for the next month, you reduce your cost basis for the sale from the previous month. @Jack100000 has suggested an excel spreadsheet to calculate this for you in the bottom of this post related to GLD shares. 

This can be labor-intensive. For transactions with no basis reported to the IRS, they will never complain about reporting a $0 basis. Entering anything else could lead to further questions, which is why you do want to keep these documents if you choose to do the work. 

@msb2

[Jack100000]

Using a cost basis of zero is a waste of money to me.  And there is a quicker solution for GLD and SLV...  The person posting it emmel650 said their spreadsheet calculation was confirmed by the program.  Not sure which they used (GLD vs SLV).    

This is the program webpage for GLD

https://www.costbasistools.com/gold/GLD.php

and this is the one for SLV

https://www.costbasistools.com/silver/SLV.php

NOTE: Not verified by an outside CPA to my knowledge, but you can store the documents on your cost basis and cap. gains/losses on the sale of assets for fees, and at least claim you did due diligence if you use the program I would think.  

You have to follow each LOT forward in time using it.  There's a bit more information on this thread if you read up and down it. 

My explanation (see posts above) will help you understand how it's done and what you need to actually report, and it's thoroughly spelled out so I won't repeat it here... 

TurboTax should have a program to import the data from companies like TD Ameritrade and Charles Schwab should help solve this too. At the moment, they don't even proficde cost basis factors for GLD, while TD Am which they bought does!   

Why do you go on for years with suboptimal solutions when you have thousands of users impacted???  Time to get to work and provide better solutions IMO.  

BTW you have to do the same tax calculations with the Crypto Trust ETFs.  Greyscale for ex. provides the data for it, but I have not found a similar program for GBTC etc.