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Negative Gross Proceeds Form 1099B

pm-zz
Level 3

Tax return rejected due to Negative Proceeds reported on Form 8949/Schedule D (Option  Sales).   Is this a software issue that hasn't been updated or a matter of the negative number isn't going to work at any point.    I've seen  where individuals using Turbo Tax had similar issues and it just recently was "fixed".   Seems odd that people spending $39 would be able to do something that someone spending 100X that can not get through. 

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8 Replies 8
itonewbie
Level 15

If your client sold options, why should your client have negative proceeds?  These options either expired with a gain or exercised, in which case, the premium would be an adjustment.

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pm-zz
Level 3

This is a TD Ameritrade Account - involves the trading of puts/calls and the proceeds have been reported correctly as Negative.   My question is a "software" question - Turbo Tax apparently allows for negative proceeds to be submitted to the IRS and Proseries has rejected the return.   Is the issue going to resolved to allow Schedule D to go through with negative proceeds. 

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itonewbie
Level 15

But how is that correct?  If you could clarify the reporting position on the 1099-B, someone may then be able to figure what happened and how to solve your problem.

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BobKamman
Level 15

When all else fails, read the instructions.

Form 1099-B instructions, Page 8

Box 1d. Proceeds
Enter the gross cash proceeds from all dispositions
(including short sales) of securities, commodities, options,
securities futures contracts, or forward contracts. Show a
loss, such as one from a closing transaction on a written
option or forward contract, as a negative amount by
enclosing it in parentheses.

itonewbie
Level 15

@BobKamman wrote:

When all else fails, read the instructions.

Form 1099-B instructions, Page 8

Box 1d. Proceeds
Enter the gross cash proceeds from all dispositions
(including short sales) of securities, commodities, options,
securities futures contracts, or forward contracts. Show a
loss, such as one from a closing transaction on a written
option or forward contract, as a negative amount by
enclosing it in parentheses.


That's different from what the OP told us.  The taxpayer didn't just sell options but actually closed to cover at a loss.  That's why proceeds are negative.  For options, I'd always refer to the detailed statements as the 1099-B just doesn't tell the whole story.

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itonewbie
Level 15

@pm-zz Take a look at the detailed statement and see if there's anything you actually need to adjust based on how the options as well as any underlying securities were bought/sold/covered.

If negative proceeds is just what it is, that your client bought to covered at a loss and PS doesn't accept negative proceeds, I'd even out the negative proceeds and then report the actual sale and cover of the option(s), which should end up with the same amount of loss.

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pm-zz
Level 3

Thanks, that's exactly what I plan on doing ---pending a response from Proseries.

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pm-zz
Level 3

As you may or may not be aware, Proseries Professional doesn't allow for "parentheses" as that was previously tried.  It's neither the TD Ameritrade statement nor the the IRS that is the issue.  Appreciate the input, I'm going to give Proseries a call.  

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