Form 8949 Robinhood Securities

[Terry D EA]

It seems there are some previous post regarding Robinhood Securities and I apologize if I am beating a dead horse here. I do understand the transactions and do know where they go; etc. My client just brought in 52 pages of these transactions. If I read the top of the 8949 correctly, we can enter these transactions as a summary????? For me to enter each individual and group transactions will take about 2 weeks solid work. I don't think this guy can afford that. Yeah, I would love the final bill but really????

Proceeds of one summary is $385,093.75 - By the transaction dates, these are day trader transactions. BTW- he lost his butt on this.

[Lion EA]

See especially page 12, and watch out for Wash Sales page 5:

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

[Terry D EA]

Good reading material. There are wash sales but they are identified as disallowed. 

Thanks,

[Possi]

I scan the details and attach it to the Sch D where I have summarized the statements. 

I have done that for years with no problem. Mine are easily attached in TWise. 

 

[Lion EA]

Did you read page 5. You might have to list the wash sales.

I ask the broker for the gain/loss statement in a format that can be read by Excel and import it into the return. I've also attached a .pdf to an e-filed return. If you're lucky enough to have only covered sales with no wash sales or other adjustments to basis, you can just summarize on Schedule D. Read the instructions.

[Possi]

2 minutes ago, Lion EA said:

Did you read page 5. You might have to list the wash sales.

I ask the broker for the gain/loss statement in a format that can be read by Excel and import it into the return. I've also attached a .pdf to an e-filed return. If you're lucky enough to have only covered sales with no wash sales or other adjustments to basis, you can just summarize on Schedule D. Read the instructions.

I have never had a problem. Wash, dirty, clean, no questions. The wash amount is on the Sch D and the detail is on the attachment. 

 

[Lion EA]

That's why I like the import. It includes everything, ties out to the 1099-B, isn't a problem to proofread, and looks impressive to justify my hefty fee! But a summary with your .pdf attachment would do the same thing. Those brokers on our clients' managed accounts make a ton of money, so I should get a piece of that. Love when a client complains about my $600 fee when they paid $1,500/Q to their brokerage. When I point out that my fee is only 10% of their broker's, they usually stop talking.

[Possi]

I don't mind paying my broker. Of course, he's not churning... LOL He's just making me money.

[Terry D EA]

I did read page 5. My wash sales are reported as required. I can attach a .pdf of the summary statement or any other parts in Drake as well. I really doubt that I could get anyone at Robinhood to give the 1099B in excel format. I would love it if they would.

 

[Slippery Pencil]

You don't need to attach anything.  Just use codes M & W on the 8949.

[joanmcq]

All 1099-Bs say wash sales are disallowed.  However some are adding the wash sale to the basis, so you don't need to make an adjustment (even though the form shows the adjustment) and others aren't.  So check your gain and make sure it matches.

[Randall]

6 hours ago, joanmcq said:

All 1099-Bs say wash sales are disallowed.  However some are adding the wash sale to the basis, so you don't need to make an adjustment (even though the form shows the adjustment) and others aren't.  So check your gain and make sure it matches.

It seems all the 1099-Bs I've seen are including the adjustment in the gain or loss they show..  That is, not including it in the basis.  But adding back the disallowed loss in showing the gain (loss) on the form.  How would you know otherwise.  If proceeds shows $100, cost basis $200, the normal loss would be $100.  If disallowed wash sale loss shows $150, the gain would show $50.  This is what I'm seeing, the $50 gain on the 1099B.

 

[Abby Normal]

Everyone I've seen this year, you enter the proceeds, basis and wash sale amounts as is and it equals the gain(loss) on the 1099B. In the past, there were a few that did not include the wash sale adjustment in the gain(loss) and that always gave me pause.

[Randall]

30 minutes ago, Abby Normal said:

Everyone I've seen this year, you enter the proceeds, basis and wash sale amounts as is and it equals the gain(loss) on the 1099B. In the past, there were a few that did not include the wash sale adjustment in the gain(loss) and that always gave me pause.

Me too.

 

[Abby Normal]

9 hours ago, joanmcq said:

All 1099-Bs say wash sales are disallowed.  However some are adding the wash sale to the basis, so you don't need to make an adjustment (even though the form shows the adjustment) and others aren't.  So check your gain and make sure it matches.

The problem is, how do you know the gain or loss on the 1099B is wrong? The only way to prove it is to look at a set transactions that resulted in a wash sale and was later sold, to determine how that broker is doing it.

[Lion EA]

The disallowed wash sale is added to the basis of the purchased stock that created the wash sale event, the timing. He might still own that stock. When he sells it with its higher basis (from the previously disallowed wash sale amount from the stock that sold that was paired with the stock purchased to create the wash sale) he will have a larger loss/smaller gain and essentially be able to use that disallowed loss finally. It's disallowed until the last stock in the chain is sold, which might be in a future year. So, what you have to watch for is -- Is the disallowed loss from this stock added to the basis of the stock purchased, so that you have an accurate basis when that stock is sold?

[Randall]

I don't know how I'm suppose to audit the broker.  I have a client with about $10k in his account with proceeds of $35 million.  I have to rely on the 1099B.  If the client has a problem, he can take it up with the broker.

 

[Lion EA]

I've called each brokerage's tax department or asked brokers I know, if I know that they understand wash sales. I also have clients that include every piece of paper when they give me their tax information, so I have their purchase confirmations and can see their purchase cost and compare to the adjusted cost basis on their 1099-B. 

I once had a broker client who did not get the comprehensive reporting package that his clients got and did a LOT of trading with a LOT of wash sales. I told him what I needed from him. He chose to pay me thousands for a few years to take his spreadsheets and adjust the disallowed wash sale losses into the adjusted basis of each respective purchase. It was a great income stream for me for about three years until he was fired and no longer trading.

[joanmcq]

I honestly don't know if the gain was adjusted or the wash sales added to basis because each of the ones where I had questions, there were tons of transactions - 1099s with 50+ pages for example.  I assumed the basis was tweaked, not the gains/losses.  Should I assume the gains/losses are incorrect?

[Randall]

2 hours ago, joanmcq said:

I honestly don't know if the gain was adjusted or the wash sales added to basis because each of the ones where I had questions, there were tons of transactions - 1099s with 50+ pages for example.  I assumed the basis was tweaked, not the gains/losses.  Should I assume the gains/losses are incorrect?

I have a similar situation.  I'm just going with the 1099B.  There's no way I can do what Lion did.

[Lion EA]

One phone call to ask if the disallowed loss was added to the basis of the stock purchased? Minutes.

Yes, you go with the 1099-B for the stocks SOLD if the math works on the 1099-B.

I just make a call (only once, unless I see evidence of a brokerage changing its methods) to make sure they are tracking the basis of the PURCHASED stock that I won't see on a 1099-B until it's sold. I do NOT take the time to track it back to the year purchased when its sold.

Except for those super-organized, keep-every-slip-of-paper clients who bring me their matched-up purchase and sale confirmations because they're just that detailed oriented or because they're identifying each stock sold (instead of FIFO). Then I randomly compare ONE purchase confirmation to the 1099-B basis for a stock where they've had lots of disallowed wash sales in prior years (you remember those when it's pages of the same stock listed on prior 1099-Bs) to make sure the brokerage adjusted the basis.

Seconds to compare one piece of paper to one trade. Less time than the phone call, so this is what I do when the client brings his purchase confirmation that corresponds to a sale. Seconds to satisfy myself that my client is getting the benefit of his prior-year disallowed loss due to timing or due to disposing of his entire holding in that stock. And, not paying tax on more profit than he made. Seconds.

[RitaB]

7 hours ago, joanmcq said:

I honestly don't know if the gain was adjusted or the wash sales added to basis because each of the ones where I had questions, there were tons of transactions - 1099s with 50+ pages for example.  I assumed the basis was tweaked, not the gains/losses.  Should I assume the gains/losses are incorrect?

 

5 hours ago, Randall said:

I have a similar situation.  I'm just going with the 1099B.  There's no way I can do what Lion did.

All my disallowed amounts this year have been less than five or six bucks.  I assume the gain or loss is off by that amount in IRS favor.  Shoot me, I don't care, and I don't have time to input and upload stuff for amounts that are negligible.  Not even for $600.  In the poor south we lose clients over stuff like that.  My $475 client who pays his broker $18,000 a year would fire me over that.

[Abby Normal]

8 hours ago, joanmcq said:

I assumed the basis was tweaked

This is a good assumption. And, ultimately, it's the broker's job to provide the correct basis and the client's job to tell us if they think it's incorrect. It's our job to input the 1099B as it was given to us. Even if basis is missing, it falls to others to provide the basis to us.

[Lion EA]

My TN clients cowering in their storm cellars and my clients in the housing projects of Bridgeport really could use an extra $600 in their refunds. And, my Westport, CT, clients afford their houses on the Sound because they search for every $600 to lower their tax liabilities. If knowing that their brokerage adjusts basis on the purchase end of a wash sale (or does not) helps me help them pay no more tax than they should, then I'm doing my job and earning my fees.

[Abby Normal]

I'll tell you what I find amusing over at reddit.com/r/tax/. All the Robinhood folks who bought investments that give them K1's. They had no idea what they were getting themselves into! And many of them have not had the pleasure of selling these investments yet.