IRS Schedule D discrepancy with 1099-B

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Global100
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Joined: Wed Dec 27, 2017 7:46 pm

IRS Schedule D discrepancy with 1099-B

Post by Global100 »

I'm filing paper taxes completed by hand calculation and will mail. I had a single sale (one "acquired" date and one "sale" date) with a capital gain.

The brokerage 1099-B form has printed:

Proceeds: $100.02
Cost: $99.50
Gain: $0.52

I round the numbers to nearest dollar to write onto Form 8949 Schedule D and the totals are:
Proceeds: $100
Cost: $100
Gain: $0

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.

To fix this discrepancy: is the correct process to round down the cost from $99.50 to $99? This would make the gain $1 (instead of $0).
Last edited by Global100 on Sat Jan 29, 2022 11:31 am, edited 3 times in total.
Makefile
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Makefile »

Are you sure you need to file form 8949? If it was a covered share and you agree with the calculated gain, you don't need to.

If was non-covered, tax software would round to the nearest dollar as you describe, even though the gain would be a dollar short in the end.
Topic Author
Global100
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Global100 »

I'm not going to use tax software. I'm completing paper taxes by hand and will mail.

The capital gain amount ($0 or $1) would go onto 1040 line 7.
Makefile
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Makefile »

I'm saying you need to file a Schedule D (Form 1040), not Form 8949.
If you fall into the category of needing to file 8949, it's over and above Schedule D, not an alternative to it.
I agree it's an oddball case, but $0 seems more correct.
Hyperchicken
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Hyperchicken »

You don't need to file 8949 at all if your cost basis was reported to IRS and if you don't need to adjust it.

Without 8949, you put the totals directly on Schedule D. That however still leads to the same discrepancy.

Gains is the main number, so I would put it as $1. Cost and proceeds are there too, but you can leave them blank. Or put them as $99 and $100. IRS does not care about +/- $1 errors introduced by rounding.
Topic Author
Global100
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Global100 »

Thank you. Yes to Schedule D, and I won't need Form 8949 this year. Excellent!
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HueyLD
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Re: IRS Form 8949 discrepancy with 1099-B

Post by HueyLD »

Global100 wrote: Thu Jan 27, 2022 10:22 pm I'm completing taxes by hand. Only a single sale of a fund (one 'acquired' date and one 'sale' date) with a capital gain.

The brokerage 1099-B form has printed:

Proceeds: $100.02
Cost: $99.50
Gain: $0.52

I round the numbers to nearest dollar to write into Form 8949 and the page totals at the bottom are:
Proceeds: $100
Cost: $100
Gain: $0

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.

To fix this discrepancy is the correct process to round down the cost from $99.50 to $99? This would make the gain $1 (instead of $0).
The IRS rule per 1040 Instructions:

“ Rounding Off to Whole Dollars

You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.”

The gain is a math calculation from sale proceed and cost basis. So, after you round the source numbers to $100 and $100, the gain is zero based on the rounding rule.
jebmke
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Re: IRS Form 8949 discrepancy with 1099-B

Post by jebmke »

Global100 wrote: Thu Jan 27, 2022 10:35 pm I'm not going to use tax software. I'm completing paper taxes by hand and will mail.

The capital gain amount ($0 or $1) would go onto 1040 line 7.
Won’t matter if it is off. (A) they don’t care about small diffs and (B) they won’t get to your return for many months since it is a paper return. Good chance that they will even lose it.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
livesoft
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Re: IRS Form 8949 discrepancy with 1099-B

Post by livesoft »

jebmke wrote: Fri Jan 28, 2022 6:11 am
Global100 wrote: Thu Jan 27, 2022 10:35 pm I'm not going to use tax software. I'm completing paper taxes by hand and will mail.

The capital gain amount ($0 or $1) would go onto 1040 line 7.
Won’t matter if it is off. (A) they don’t care about small diffs and (B) they won’t get to your return for many months since it is a paper return. Good chance that they will even lose it.
Ha! Ha! I e-filed one year and the IRS reduced my refund by $1 because the tax-prep software did the rounding in a way that the IRS did not like. So the IRS does care, but only if their computers care. :twisted:
Wiki This signature message sponsored by sscritic: Learn to fish.
jebmke
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Re: IRS Form 8949 discrepancy with 1099-B

Post by jebmke »

livesoft wrote: Fri Jan 28, 2022 6:14 am
jebmke wrote: Fri Jan 28, 2022 6:11 am
Global100 wrote: Thu Jan 27, 2022 10:35 pm I'm not going to use tax software. I'm completing paper taxes by hand and will mail.

The capital gain amount ($0 or $1) would go onto 1040 line 7.
Won’t matter if it is off. (A) they don’t care about small diffs and (B) they won’t get to your return for many months since it is a paper return. Good chance that they will even lose it.
Ha! Ha! I e-filed one year and the IRS reduced my refund by $1 because the tax-prep software did the rounding in a way that the IRS did not like. So the IRS does care, but only if their computers care. :twisted:
The WOPR can’t be stopped..🖥

Also, the paper return will be input to an electronic file when/if it is ever processed.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
rkhusky
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Re: IRS Form 8949 discrepancy with 1099-B

Post by rkhusky »

Global100 wrote: Thu Jan 27, 2022 10:22 pm The brokerage 1099-B form has printed:
Proceeds: $100.02
Cost: $99.50

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.
My guess is that, if these are covered shares, the brokerage reports:
Proceeds: $100.02
Cost: $99.50

And the IRS will compute the gain themselves.
MarkNYC
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Re: IRS Form 8949 discrepancy with 1099-B

Post by MarkNYC »

rkhusky wrote: Fri Jan 28, 2022 6:54 am
Global100 wrote: Thu Jan 27, 2022 10:22 pm The brokerage 1099-B form has printed:
Proceeds: $100.02
Cost: $99.50

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.
My guess is that, if these are covered shares, the brokerage reports:
Proceeds: $100.02
Cost: $99.50

And the IRS will compute the gain themselves.
I have never seen the IRS compute the gain themselves based on the proceeds and basis listed on the 1099-B. The gain is computed on the tax return based on the proceeds and basis amounts listed there. In fact, with regard to covered transactions, I have never seen evidence that the IRS uses the basis number on the 1099-B for ANY purpose in the processing of the tax return, or in their 1099 document-matching program. If anyone has seen it, I'd like to hear about it.
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BrandonBogle
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Re: IRS Form 8949 discrepancy with 1099-B

Post by BrandonBogle »

jebmke wrote: Fri Jan 28, 2022 6:33 am The WOPR can’t be stopped..🖥
I loved that movie! I wonder what Joshua would be doing nowadays?
jebmke
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Re: IRS Form 8949 discrepancy with 1099-B

Post by jebmke »

BrandonBogle wrote: Fri Jan 28, 2022 2:29 pm
jebmke wrote: Fri Jan 28, 2022 6:33 am The WOPR can’t be stopped..🖥
I loved that movie! I wonder what Joshua would be doing nowadays?
Works for Facebook, of course.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
User avatar
BrandonBogle
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Re: IRS Form 8949 discrepancy with 1099-B

Post by BrandonBogle »

jebmke wrote: Fri Jan 28, 2022 2:46 pm
BrandonBogle wrote: Fri Jan 28, 2022 2:29 pm
jebmke wrote: Fri Jan 28, 2022 6:33 am The WOPR can’t be stopped..🖥
I loved that movie! I wonder what Joshua would be doing nowadays?
Works for Facebook, of course.
Ahh, he hasn’t realized that’s also another game that is best not to play!
jebmke
Posts: 25476
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: IRS Form 8949 discrepancy with 1099-B

Post by jebmke »

BrandonBogle wrote: Fri Jan 28, 2022 2:57 pm
jebmke wrote: Fri Jan 28, 2022 2:46 pm
BrandonBogle wrote: Fri Jan 28, 2022 2:29 pm
jebmke wrote: Fri Jan 28, 2022 6:33 am The WOPR can’t be stopped..🖥
I loved that movie! I wonder what Joshua would be doing nowadays?
Works for Facebook, of course.
Ahh, he hasn’t realized that’s also another game that is best not to play!
👍
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Tanelorn
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Re: IRS Form 8949 discrepancy with 1099-B

Post by Tanelorn »

BrandonBogle wrote: Fri Jan 28, 2022 2:29 pm I wonder what Joshua would be doing nowadays?
Buying NFTs or Magic Internet Money tokens and cashing in while nearly everyone else has no idea what this stuff means?
RubyTuesday
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Joined: Fri Oct 19, 2012 11:24 am

Re: IRS Form 8949 discrepancy with 1099-B

Post by RubyTuesday »

livesoft wrote: Fri Jan 28, 2022 6:14 am
jebmke wrote: Fri Jan 28, 2022 6:11 am
Global100 wrote: Thu Jan 27, 2022 10:35 pm I'm not going to use tax software. I'm completing paper taxes by hand and will mail.

The capital gain amount ($0 or $1) would go onto 1040 line 7.
Won’t matter if it is off. (A) they don’t care about small diffs and (B) they won’t get to your return for many months since it is a paper return. Good chance that they will even lose it.
Ha! Ha! I e-filed one year and the IRS reduced my refund by $1 because the tax-prep software did the rounding in a way that the IRS did not like. So the IRS does care, but only if their computers care. :twisted:
Had something similar happen and the small change in refund caused the IRS to not buy I Bonds as requested.
:oops:
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
rkhusky
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Re: IRS Form 8949 discrepancy with 1099-B

Post by rkhusky »

MarkNYC wrote: Fri Jan 28, 2022 2:22 pm
rkhusky wrote: Fri Jan 28, 2022 6:54 am
Global100 wrote: Thu Jan 27, 2022 10:22 pm The brokerage 1099-B form has printed:
Proceeds: $100.02
Cost: $99.50

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.
My guess is that, if these are covered shares, the brokerage reports:
Proceeds: $100.02
Cost: $99.50

And the IRS will compute the gain themselves.
I have never seen the IRS compute the gain themselves based on the proceeds and basis listed on the 1099-B. The gain is computed on the tax return based on the proceeds and basis amounts listed there. In fact, with regard to covered transactions, I have never seen evidence that the IRS uses the basis number on the 1099-B for ANY purpose in the processing of the tax return, or in their 1099 document-matching program. If anyone has seen it, I'd like to hear about it.
So, if the taxpayer makes an error in their reporting, the IRS won’t catch it?
MarkNYC
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Joined: Mon May 05, 2008 7:58 pm

Re: IRS Form 8949 discrepancy with 1099-B

Post by MarkNYC »

rkhusky wrote: Sat Jan 29, 2022 4:55 pm
MarkNYC wrote: Fri Jan 28, 2022 2:22 pm
rkhusky wrote: Fri Jan 28, 2022 6:54 am
Global100 wrote: Thu Jan 27, 2022 10:22 pm The brokerage 1099-B form has printed:
Proceeds: $100.02
Cost: $99.50

The brokerage reports the gain to the IRS of $0.52, which rounds to $1.
My guess is that, if these are covered shares, the brokerage reports:
Proceeds: $100.02
Cost: $99.50

And the IRS will compute the gain themselves.
I have never seen the IRS compute the gain themselves based on the proceeds and basis listed on the 1099-B. The gain is computed on the tax return based on the proceeds and basis amounts listed there. In fact, with regard to covered transactions, I have never seen evidence that the IRS uses the basis number on the 1099-B for ANY purpose in the processing of the tax return, or in their 1099 document-matching program. If anyone has seen it, I'd like to hear about it.
So, if the taxpayer makes an error in their reporting, the IRS won’t catch it?
The IRS document matching program will look to match the proceeds listed on the tax return with the proceeds on the Form 1099-B. Without an actual audit, I don't think the IRS will catch any other error on the tax return related to the sale.
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