It is important that you run the 1099 Reconciliation report for each brokerage account data file before combining files in TradeLog. Make sure to enter the 1099-B Information requested properly as this will affect reconciliation results.

 

Brokerage firms don't provide enough tax information to calculate different types of trader tax returns. The IRS requires that brokerage firms provide their clients with an IRS Form 1099-B which offers information to assist with tax reporting. Brokerage firms are known to make errors on their statements, which affects the data on your Form 1099. It is essential for traders to keep their own daily trading records, and check these against their broker statements. The IRS continues to acknowledge that taxpayers are responsible for accurate reporting, despite what your broker provides.

 

TradeLog's 1099-B reconciliation report attempts to reconcile the reported Gross Proceeds with TradeLog reported sales. The sale amount reported by TradeLog should not be less than your broker reports.

 

TradeLog reports cost basis on Form 8949, Parts 1 and 2, check boxes A, B, and C. It is almost impossible for TradeLog reported cost basis to match what your broker reports. This is because your broker does not have to report all cost basis, and they report adjustments for wash sale rules differently than is required for traders. However, to reduce risk of audit, TradeLog does make an adjustment to reconcile the total cost basis reported on forms with check box A selected. The adjustment enables TradeLog to match cost basis to your broker reported total. An appropriate adjustment code is displayed to inform the IRS that basis reported by the broker is not correct.

 

Because 1099-B reporting is varied by broker and new problems are being found in 2011, we have setup a special web page specifically for 1099-B problems. Please review that page to understand these problems and for help in reconciling with your brokerage reporting.

 

www.tradelogsoftware.com/1099b/

 

 

There are several reasons why your brokerage 1099 total sales may not match the total sales figure reported on your TradeLog Gains and Losses Report:

 

Open Short Sales from Previous Tax Year

If you had open short sales from the previous tax year that were closed in the current year, then they will increase the TradeLog total sales amount. The TradeLog 1099 Reconciliation report adjusts for open short sales from the previous tax year.

 

Options Trading not Reported

Most brokers do not report option sales on the broker 1099, or report them separately. The TradeLog 1099 Reconciliation report adjusts for option sales.

 

Trades Reported by Settlement Date

TradeLog records trades by execution date (Trade Date) versus settlement date, per IRS guidelines. Some brokers incorrectly report sales by settlement date, which means: 1) a few sales from the previous year were reported on your broker 1099 for the current year because they didn't settle until then, or 2) there may be a few sales in the current year that settled in the following year, and therefore were not accounted for on your broker 1099. Look at your December and January statements carefully to identify trades that should be accounted for in the previous year or the current year, and adjust the sales total on your Gains and Losses Report accordingly.

 

Missing or Duplicate Trades

You may have imported a trade history report that is incomplete or is missing trades. Many times manual adjustment entries made throughout the year will cause inaccurate or duplicate trade records in your broker history report which was imported into TradeLog.

 

Check your trade history report carefully - are any trades missing? Does your report show any corrective entries (cancellations, etc.) which could result in duplicate trade records? If it does, check the imported trades in your TradeLog data file. Enter any missing trades manually, and delete any duplicate trades. Duplicate trade records can be located by clicking Find, Duplicate Trades.

 

Cash Distributions Reported as Gross Proceed

A cash out merger or cash merger can appear on broker 1099's. This occurs when a company provides a cash distribution through a corporate action instead of shares. As with other corporate actions, the details of this merger are not listed in the trade history nor available for import into our software. There has to be a manual adjustment, or an additional record recorded to properly account for the company's actions. 

 

Your Broker 1099 is Inaccurate

Your 1099-B has mis-reported your sales or the total sales figure is simply wrong - remarkably, this does happen! Check your broker report carefully against your monthly statements. The Grid Filter Dialog makes it easy to find all your stock sales for the current tax year so you can compare each sale on your 1099 to your sales in TradeLog.

 

If you see a discrepancy, contact your broker for assistance in amending their 1099.

 

 

 

If you are having difficulty reconciling your broker 1099 with your data file, we recommend that you start from the beginning and import your monthly trade history reports.  While users can import yearly statements from certain supported brokers, monthly imports can help a user identify and edit an errant transaction more efficiently.

 

 

 

For example:

 

 

We have found that this monthly approach to importing can break down even the biggest problem into much smaller pieces, and therefore is usually much easier to find and fix than when trying to deal with a whole year's worth of data. This is one situation in which your monthly statements can be invaluable.