Interesting 1099B error

[Kea]

Client has several stock sales through Vanguard broker. Most were covered transactions but one was a wash sale. So I have to enter that transaction separately (I left rest combined and reported that sub-total).

The strange part - It shows 2 sales as Long Term covered (and to use Box D), but when I entered the dates, I saw that these are actually Short Term! I would really think that a company as large as Vanguard would realize 4 days was not LT! (10/10/13 - 10/14/13).

Since this is a wash sale, there is no gain / loss change. But my question is if I should still report it as Long Term to keep from getting an IRS nastygram? (I would change the acquisition date to "various".) Not sure it's worth waiting for Vanguard to fix for something that had ZERO impact on tax or taxable income.

Sound reasonable?

And just a head's up to double check the 1099Bs!

[MsTabbyKats]

Fidelity had something on my son's 1099-B. They said to enter it on Part 2...with code A. I know it's long term..so I put D. I called to complain....and they said the IRS had changed the form...or some nonsense...and that revised statements wouldn't be issued. So I put it where I knew it belonged. But the did say Part 2,,,,just with the wrong letter.

Just check....and make sure it's 4 days....not a year and 4 days. And put it where it should go,

Did they say put it on Part 2...or part 1?

[joanmcq]

I've had one already where they said to report code A pt 2 as well (might have been Fidelity), not code E. You'd think if all the other brokers got it right, Fidelity could. We're not confused (at least not by this) but all those DIY people could have issues.

[Margaret CPA in OH]

Ahh, good to know it isn't only me. I've had 3 Schwab trust accounts with the wrong code on every one. Because the dates are listed and I figured the software will want the code they show to match the dates, I input the code with the correct description. All efiled fine and I am assuming that the dates will be the controlling factor in the long run, anyway. There weren't too many entries so I just entered all transactions.

[Kea]

Yep, I double checked the dates! One was held 4 days and one for 11 months. Heading says "LONG TERM" report in "Part II Code D."

I'll use the correct dates and change to Code A.

Any IRS nastygram will be easy to address. I was thinking it might be good to use "various" so I could avoid the nastygram - since there is no tax consequence.

Thanks. Glad to know others are seeing these errors. (er, you know what I mean.)

[Joel]

Yes, but the question is will the IRS match your 'corrected' information to the 1099B received from the brokerage house? Would you not get a nastygram that should have been eliminated by the correct 1099B from the brokerage.

I have a 1099B with long term, code D, in which the date is less than a month. I count about 25 of these with the same purchase date. When I questioned my client, he stated that he thought that might be the date his mother died from whom he inherited the stock. This would make sense as that automatically is long term and should have 'inherited' as the purchase date. We are checking with the broker on Tuesday.

[grandmabee]

what if it was from a previous wash sale? Don't you use original l date

[Kea]

what if it was from a previous wash sale? Don't you use original l date

Good point! I just looked at his 2012 info and he sold this stock at a loss last year, too. That would turn it into long term! I guess Vanguard got this one right.

Thanks!