Where/how to report expenses incurred in current year related to a stock sold in prior year

Kipa · ‎March 6, 2026

We sold stock in 2024, and reported the capital gains on our 2024 return from that sale. In 2025, we incurred additional expenses related to that 2024 sale. Those 2025 expenses should be reported as a capital loss in 2025. I can't figure out how to record this in Turbo Tax, and what information needs to be included. The EasyStep workflow doesn't seem to consider this situation. If you have any insight, please let us know. We're using the desktop version of Turbo Tax Premier.

Posting here as I got no responses in the "after you file" forum.

Thank you.

ThomasM125 · ‎March 9, 2026

Cash basis accounting has more to do with when you report income than when you report deductions, at least as it pertains to non-business income.

For the most part, you need to report the income and expenses associated with a taxable event in the year in which it occurred or is reasonably able to be determined. For instance, if you have a casualty loss, you must report the loss in the year it occurred, or in a future year if you need to wait to see what the insurance proceeds are. The loss and associated insurance proceeds should be reported in the same year, however. You don't report the loss in one year and then adjust it back in the year the insurance proceeds are received.

In the case of the sale of investments, there are period specific rules that govern how they are reported and taxed. The net gain on the sale of short-term assets must be netted against the net gain on the sale of long-term assets. Also, you are only allowed to deduct a net capital loss of up to $3,000 against ordinary income per year. If you report the cost of an asset sale in a future year, you would distort the proper reporting of the gain or loss in the year it was sustained.

Some exception exist, such as in the case of installment sales where you report income on a sale as the payments are received. But even in that case, the gain on the sale is reported in the year the sale took place. It is just taxed as the proceeds are received. If you do as you suggest and deduct a portion of the investment sale in a future year, the net gain or loss would not be properly reported in the year of the disposition.

It is unfortunate that the issue is not addressed better in the IRS literature, as it is rare to sell an asset before all costs of acquisition have already been made. That is why I mention the IRS may take exception to your treatment.

[Edited 3/9/26 at 1:20 PM PST]

@Kipa

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View solution in original post

MaryK4 · ‎March 7, 2026

You can enter this as a Capital Sale without a 1099-B:

From the Federal section, under Wages & Income,
Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B, 1099-DA) under Investments and Savings
On the Let’s finish pulling in your investment income page, click on Add investments.
On the Save time and connect your financial accounts click on Enter a different way
On the How do you want to add your docs? click on Type it in myself
On the OK, let's start with one investment type, click on Other and Continue
On the Tell us more about this sale, type Expenses
On the Now, enter one sale for Expenses, complete the information:

use the date you received the original stock (reported in 2024) as Purchase Date
date you received expenses or 12/31/2025 as Date of Sale
enter expense amount (as a negative number) as Proceeds
enter zero for Cost or other basis

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Kipa · ‎March 7, 2026

Hi @MaryK4 . Thank you help - very much appreciated.

My "Easy Step" workflow doesn't follow yours. After I click on "Add investments", it takes me a "Let Us Enter Your Bank and Brokerage Tax Documents" screen (screenshot below). I then click on "Skip this Import" as I don't have a 1099-B for these selling expenses. The next screen (screenshot below) says "OK, let's start with one investment type". It only gives me choices related to a specific 1099 form. No where does it give me an option to "Type it in myself" or anything similar. I've tried entering a fake 1099-B, but after entering that, it just brings me back to this "OK, let's start with one investment type" screen. I can't figure out where I should go.

Thanks for any additional help you may have,

Gary

ThomasM125 · ‎March 9, 2026

It would be best to amend the 2024 return to report the sale and total cost of the investment in the same period. To report the additional costs in 2025, you would follow these steps, but upon audit the IRS may deny the deduction in 2025 since the sale occurred in the prior year:

1. Navigate to Investment Income in the Wages and Income section of TurboTax2. Choose the Stocks, Cryptocurrency, ... option

3. Skip the Import option

4. Choose the Other (land, second homes, personal items) option for investment type

You will come to a screen where you can enter your proceeds ($0 in this case) and cost basis, choose the "Other" option for type of investment sale.

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Kipa · ‎March 9, 2026

@ThomasM125 , what would be the basis for recording an expense paid in 2025 on an amended 2024 tax return? While this makes somewhat logical sense, I thought that taxes were cash-based. What is the basis/precedent for filing an amendment that records a 2025 expense in 2024?

ThomasM125 · ‎March 9, 2026

Cash basis accounting has more to do with when you report income than when you report deductions, at least as it pertains to non-business income.

For the most part, you need to report the income and expenses associated with a taxable event in the year in which it occurred or is reasonably able to be determined. For instance, if you have a casualty loss, you must report the loss in the year it occurred, or in a future year if you need to wait to see what the insurance proceeds are. The loss and associated insurance proceeds should be reported in the same year, however. You don't report the loss in one year and then adjust it back in the year the insurance proceeds are received.

In the case of the sale of investments, there are period specific rules that govern how they are reported and taxed. The net gain on the sale of short-term assets must be netted against the net gain on the sale of long-term assets. Also, you are only allowed to deduct a net capital loss of up to $3,000 against ordinary income per year. If you report the cost of an asset sale in a future year, you would distort the proper reporting of the gain or loss in the year it was sustained.

Some exception exist, such as in the case of installment sales where you report income on a sale as the payments are received. But even in that case, the gain on the sale is reported in the year the sale took place. It is just taxed as the proceeds are received. If you do as you suggest and deduct a portion of the investment sale in a future year, the net gain or loss would not be properly reported in the year of the disposition.

It is unfortunate that the issue is not addressed better in the IRS literature, as it is rare to sell an asset before all costs of acquisition have already been made. That is why I mention the IRS may take exception to your treatment.

[Edited 3/9/26 at 1:20 PM PST]

@Kipa

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Where/how to report expenses incurred in current year related to a stock sold in prior year