My 1099B has sales where gain/loss doesn't match the proceeds minus the cost basis due to short-to-longterm capital loss conversion. How do I enter a different gain/loss?

[andrewmagee]

The 1099-B provides some context:

This transaction reflects the conversion of a short-term capital loss into a long-term capital loss. This occurs when you have a short-term loss on mutual fund shares which were held 6 months or less, and you received a long-term capital gain distribution on those shares. For information about the rule, please refer to Internal Revenue Code section 852(b)(4) or IRS Pub. 550, Capital Gains and Losses Section. Taxpayers will need to reflect this adjustment when preparing their tax returns.

I am able to go in and edit the sale manually, but TurboTax only lets me enter the Proceeds (box 1d) and the Cost basis (box 1e), and it calculates the Gain or Loss from those. To accurately reflect what's been reported, I need to enter a different Gain/Loss than what is being calculated.

[DavidD66 · Accepted solution]

Can you clarify something:  Did you download your transactions?  If you downloaded your transactions you are limited in what you can edit.  You will need to delete the transactions and manually enter them.  You will then be able to make the necessary adjustments to your transactions.  

[andrewmagee]

Yes, I downloaded them, so that's likely the issue. I had thought that deleting a single sales line and creating it manually would be enough, but you're correct that it seems I have to re-enter all of the sales manually in a new form.

Thanks for the help.

[LeelaBell]

Andrew, I have the exact same situation, but I did enter my gains and losses by hand.  I'm unclear how to adjust it to match the net gain/loss on the 1099-B.  If I click the box to allow adjustments, I can make them - like for the wash sales -- but I don't see a selection in the drop down that seems to match this short term/long term cap gain conversion.  Have you found a way to do it? 

[JamesG1]

If your situation is similar to @andrewmagee above, your long-term and short-term 1099-B entries do not match the 1099-B provided by your broker.  Am I correct?

You have a manually entered 1099-B entry which is reporting as short-term and you want to report it as long-term.

Are you able to select I need to correct the holding period at the screen Let us know if any of these situations apply to this sale?

Learn more to the right states:

If the 1099-B reports an incorrect holding period in box 2, this is where you should enter the corrected holding period. This might happen if you sold items that were recently inherited (sales of inherited items are always treated as long-term), or for less common reasons.

Edit the box Sales section from short-term to long-term.

You may be able to view the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets after you have paid for the software.

@LeelaBell 

[andrewmagee]

I don't think my situation was exactly what @JamesG1 described. My 1099-B entries did not add up within a certain line. For example, one entry in the short-term section may look like this (numbers are made up):

Short-term Proceeds: 70

Short-term Cost Basis: 100

Short-term Gain or loss: -20

The "expected" loss would be -30, but it was written as -20. This is because $10 of this was converted from short-term to long-term capital loss.

Separately, I found there was an entry in the long-term section that would correspond to this conversion:

Long-term Proceeds: 0

Long-term Cost Basis: 0

Long-term Gain or Loss: -10

This entry them made the overall loss sum to the correct amount, and I guess it handled converting the appropriate portion of it to long-term.

Turbo Tax allowed me to enter the proceeds and cost basis for each line, but didn't allow me to adjust the gain/loss. It's possible that selecting I need to correct the holding period would have helped, but I didn't explicitly try that - and I don't know if it would've allowed me to correct the holding period only for a portion of the entry.

@LeelaBell I ended up fixing this by just manually adjusting the cost basis of each entry so that the final gain/loss number was correct. As far as I'm aware (although I'd be happy for anyone to correct me if I'm wrong), the final sums for gain/loss in each section are what ends up mattering rather than the specific cost basis for each entry.

[GeorgeM777]

Yes, adjusting the cost basis is probably the most efficient way to get the gain/loss numbers in TurboTax to match your 1099-B.  Adjusting the holding period would move transactions from short-term to long-term and vice versa, but this method may not yield the result you are trying to achieve.  The firm that issued the 1099-B is probably the only source that can explain why your gain/loss amounts are reflected in this way.  

@andrewmagee 

[LeelaBell]

Thank you both.  I have exactly to a T the situation @andrewmagee  laid out in his example.  It is pretty odd to me that the firm that issued the 1099-B reported it this way where gain/loss does not reflect their reported proceeds minus cost, but I'm sure there must be some regulation requiring them to report it that way.  They explained that it is due to a conversion of short-term capital loss into long-term capital loss in the notes and commented "taxpayers will need to reflect this adjustment when preparing their tax returns."  I am wondering if I can fix it through a type T "(type of gain or loss is incorrect)" adjustment on each entry - one for the short term sale and one for the long term.  I would only enter the amount that needs to be shifted for each (in my case, we're only talking about $20!)