If only one recipient is designated on the Form 1099-B, the indicated person whose TIN SSN was reported as receiving the proceeds of the transaction must file indicating the entirety of the transaction. Then, within the filing process, a correcting adjustment is made to indicate that a portion of the proceeds were received in nominee [meaning in the name of] a second party. A reversing entry is then made.
For TurboTax processing of Form 1099-B, you would follow these steps and see the attached image - WARNING: TurboTax does not support an Adjustment on Form 8949 of Code=N for nominee, so you must print out your return and mail it; before doing this you will have to manually alter the Form 8949 on the printed form as indicated below. Also, in manually altering the Form 8949 and the non-submitted Form 1099-B Worksheet, you will be invalidating the TurboTax "guarantee." It will be as if you had done all the entries manually on blank forms, although TurboTax will have done all the calculations and have put all the other entries where they belong. [Alternative: Have a professional preparer do your return and share the cost with the co-owner!]
Sales of investment assets where the sale is undertaken "in nominee" now must be reported as an Adjustment.
First, report the entire Form 1099-B on the Form 1040 for the named recipient on the Form 1099-B.
1099-B is far more difficult because the program now no longer allows a negative number of shares to be entered.
Note that you must click that Box 1G is to be entered. Box 1F has no appropriate explanation. When you leave this blank, TurboTax will flag it as an error. When you do the Federal (and State) review, you will have to ignore this error. This will require you to file a printed, paper return to be mailed in. The Gross Cost Basis will be that as reported, if reported, on the Form 1099-B, and an adjustment must be manually entered. In the entry of the Supporting Documentation Worksheet, use the in nominee party's [the other party] as follows "Received as Nominee for XXXXX (and the person and the EIN/TIN/SSN of that party)". Enter a negative amount representing that person's share of the NET Gain or a positive amount representing that person's share of the NET Loss!
This will allow your Schedule D to be properly calculated even though the Form 8949 will be in wrong form and TurboTax will indicate an error. You must manually correct the Form 8949 as shown in the image - the two pink blocks - in the first enter as a negative number (if a capital gain) the amount of proceeds distributed to the co-owner; in the second pink block should be the resulting sum of net proceeds less the distribution. On the Form 1099-B Worksheet which is not filed or sent in, Box 8a the pink block Enter (for your records) "N"
Notify the other party of their obligation to file as if they had received a Form 1099-B for their portion of the gain or loss. [They benefit if it is a loss!]
See the image. Make sure to print and include this Supporting Information, if necessary with an explanatory statement. For your own benefit retain a copy of this worksheet in the PDF that you will save of your entire tax filing [print all forms and all worksheets].
IMPORTANT: The Supporting Document can not be transmitted in an eFile but that does not prevent you from doing Paper mailed return. HOWEVER, I do believe that this reporting may offer an enhanced likelihood of an written inquiry so be prepared to have a written explanation. Your worksheet should be sufficient as explanation.
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67
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USAR 64-67 AIS/ASA MOS 9301 - O3
- Just donating my time
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