Cost basis not reported but the info is available

[jeromedawg]

Hi all,

So I sold 20 shares of a stock back in August 2016 and on the 1099-B from Scottrade, one of the transactions (for 6 shares of the stock) is classified "Undetermined term transactions for noncovered tax lots" (it says the Basis was not provided to the IRS). The thing is, I can go onto my Scottrade transaction history and see the stock was purchased back in 2007 and the cost basis/what I paid shows for that date. The remaining 14 shares were purchased in 2014 and are correctly reported.

What is the process for 'correcting' this basis? Do I need to report "E" for long-term transaction where basis was not reported to IRS and then do something else? Or can I just report D and enter the cost basis from the transaction history amount?

[jeromedawg]

NM I'm dumb - there's an option in Taxact to correct basis (B) so I filled that part out and it looks OK now.

[Spork]

Just fyi... I think (NOT an expert!) the thing here is that there was a law passed a few years back (about 2011?) that required cost basis reporting.  I believe pretty much anything purchased prior to that time is likely to trigger the "noncovered tax lots" thing. 

It sounds like you figured it out... but it's likely to happen again for anything purchased prior to ~2011.

[HAFMAC]

Spork is correct.  Brokerages were required to start reporting basis a few years ago.  Until then they just reported gross proceeds from a trade.  If you sell shares where the basis was not reported then you need to go into the tax program you use and override with the correct basis.  Otherwise the basis is assumed to be zero which is not correct.

[jeromedawg]

Spork is correct.  Brokerages were required to start reporting basis a few years ago.  Until then they just reported gross proceeds from a trade.  If you sell shares where the basis was not reported then you need to go into the tax program you use and override with the correct basis.  Otherwise the basis is assumed to be zero which is not correct.

THanks - yep, I found the line item to make adjustments to the cost basis in Taxact. I didn't notice it at first and thought I should just enter the cost basis in the actual box on the form but using the line item to make the adjustment seems to be the proper way.