What to enter for "corporate bond" investment listed on 1099-B

[h-bomb]

Hi and thanks in advance. I am currently working on my taxes in TurboTax Premium online and was hoping you could help me understand some missing values for a "corporate bond" investment listed on my 1099-B under the following headings:

Under "1099-B Proceeds from Broker and Barter Exchange Transactions Summary":

UNKNOWN TERM - CODE (X) REPORT ON FORM 8949 PART I OR PART II

Note: Only the "Proceeds" (first line) has a non-zero value...

Box B or Box E (basis not reported to IRS): $111.71
Box B or Box E - Ordinary - (basis not reported to IRS): $0.00

Under "1099-B Proceeds from Broker and Barter Exchange Transactions Details":

The Date Sold or Disposed of the bond: 7/15/2024
Quantity sold: 5,000.00000
Gain/Loss Amount: N/A
Additional Info: Return of Principal

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In looking through past statements, I found the following info:

June 2023 Statement Info:
The bond was purchased on: 6/13/2023
Quanitity: 5000
Price: $100.1250
Amount: $5,006.25

July 2024 Statement Info:
For the sold/disposed date of 7/15/2024, I see these entries for the bond:
Transaction: Interest | Amount: $145.00
Transaction: Principal | Amount: $111.71

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My questions:

1. Do I need to enter this "unknown" on the TurboTax 1099-B form? If yes..
2. TurboTax Premier only allows entries from the 1099-B for Gains and Losses, not Unknowns. How do I enter this? (It looks like a "Gain - with basis not reported to IRS", but uncertain.)
3. Is the Date Acquired the same as the Date Purchased? In this case, 6/13/2023?
4. What do I enter for the cost basis?

[JamesG1]

The cost basis of the bond is $5,000 and should be entered as Cost or other basis.  Check the box The cost basis is incorrect or missing on my 1099-B.

Bond premium should be amortized.  When the bond matures, your basis will be the face value of the bond.

Use 6/13/2023 as the date purchased.

[h-bomb]

👋🏻 @JamesG1 - Thanks so much for getting back to me. I've attached a couple screenshots of the TurboTax Premium 1099-B web form and the Sales Section drop-down menu options (from the same web form). I believe I need to select the Long-term basis not reported to IRS (noncovered) drop-down menu option (required field) in addition to the other adjustments you advised me to make. Please review and confirm what I selected/entered (all circled in red) is correct.

Sales Section drop-down menu options:

[h-bomb]

@JamesG1 - Follow-up to my previous question... I re-reviewed and now wonder if I should move the $5,000 to the Total cost or other basis (sum of all Box 1e) field - please let me know...

[RobertB4444]

You have entered that correctly for this transaction.

@h-bomb 

[h-bomb]

Thanks, @RobertB4444 and the followup I posted is the correct way to enter the $5,000 basis?

[RobertB4444]

Yes, both of your entries seem to be correct for this circumstance.

@h-bomb 

[h-bomb]

@JamesG1 or @RobertB4444 - Regarding:

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@JamesG1 wrote:

The cost basis of the bond is $5,000 and should be entered as Cost or other basis...

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I wasn't clear where $5,000 came from and was wondering if it should be the cost of the bond on the purchase date (6/13/2023), i.e.: $5,006.25

[RobertB4444]

Yes, I'm sorry.  We rounded you off there.  The correct basis in your instance is $5006.25.

@h-bomb 

[h-bomb]

Hello @RobertB4444 & @JamesG1 - I was waiting for a confirmation from my financial advisor on the updated info you both provided this week and she just got back to me - looks like the bond was actually not sold. Here is the info she provided:

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The 1099-B shows under "additional information" that this is a return of principal.

This bond was not sold, it was Called by the issuer at a premium (i.e., a called bond at a premium). This means that the 5,000 shares were paid back to you, and there was a premium over the amount paid for the bond of $111.71. So basis isn’t reported or necessary in this situation, nor is it a gain from sale - no sale occurred.

You will need to count it as a gain due to the bond being called at a premium.

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I've attached both a screenshot of the section of the 1099-B she was referring to and what I believe I should now enter in TurboTax Premium online. Would you agree that the way I entered it on the 1099-B form (on the attached) represents this particular situation? If not, please let me know exactly how to enter this in TurboTax Premium online. This change increased my taxes due quite a bit so I just want to double check with you both.

This type of tax event is new to me, so I really appreciate your continued help on this. 🙏🏻

[MarilynG1 · Accepted solution]

If adjustments for bond premiums are not reflected on a1099-INT, you can manually enter the bond premium adjustment in the 1099-INT section of TurboTax.  You won't need to enter the 1099-B, just keep it for your records.

Here's detailed instructions on Reporting Bond Premiums and also a Guide to Investment Bonds.

@h-bomb 

[h-bomb]

Hi @MarilynG1 - thank you so much... very helpful info. I confirmed the bond CUSIP is on my 1099-INT.