Stock lots are all screwed up!

Dec 19, 2013 4 Replies

I sold specific lots of a stock because I wanted to take a loss. The broker traded the wrong lots, claiming there was a computer foul up on that stock that day. He has corrected the lots on the "taxable gains/loss" report that will be reported to the IRS, but says he cannot change the lots that are still in my account. Apparently the lots can only be changed in the first 3 days. I reported the problem the second day, but he just didn't get around to fixing it and the 2nd time I complained it was too late. (yeah, I need a new broker!)



So when I eventually sell the rest of the lots, what I put on my income tax will not match what the broker reports; as his reports will show me selling the same lots twice.



I will actually be claiming (in later years...) a bigger profit than the broker shows, so the IRS shouldn't give me too big a problem over it; but do I mention it somewhere, or just ignore it?



I could "fix" it by having him revise the "taxable gains/loss" to correspond to his error, selling everything, and buying some back; but that would give me wash sales. Which lots would the wash sales be on? The ones I choose, the latest ones, the ones with the biggest losses?


As far as the IRS is concerned, the actual lots you sold are what matter, not what some screwed up database says. You should save any communication with the broker that confirm that they were unable to correct the database. You'll have to keep track of the gains and losses yourself, rather than relying on the broker's statements. If the IRS ever audits you because of a discrepancy between what you and the broker report, you can refer to those communications.

When you sell and report on Form 8949 you make an adjustment to the basis reported by the broker. If people are being smart and keeping good records rather than trusting brokers to accurately report, I suspect the IRS will be seeing a lot of these.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Do I mention the adjustment in a footnote, or just do it?

You follow the instructions for preparing the form.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

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