Adjusted Cost Basis (ACB) on form 1099-B?

[AZ-Tax]

$50694 gross proceeds, $58931 Original cost basis, $8291 ACB = ($8105) net loss

My ProSeries tax software does not have a column within Sch D wkst for ACB and I read up on what ACB is but gross proceeds minus cost basis = $8237 loss. How did they come up with a $8105 loss

Anyone ever seen this before?

[FEDUKE404]

Perhaps

wash sale

or

employer/employee contributions

or

single sale with ST/LT capital gains involved

or

funny things via spin-off somewhere in the deep past ????


Good luck!

[jimmcg]

Give the issuer a call and ask for the facts. Works for me. Otherwise, as previously stated could be many things.

[AZ-Tax]

These are multiple mutual fund exchanges and/or sales

These are multiple mutual fund exchanges and/or sales within the family of funds.

[Gary2]

Does it actually say "adjusted" and not "average"?

[AZ-Tax]

Adjusted Cost Basis......

I have seen enough of these 1099-B's in my lifetime plus being a Series 7 rep for over 20 yrs, I must say I never saw one like this before.

[Gary2]

What about returns of capital?

[AZ-Tax]

This is the definiton of the ACB

From the "2010 Realized gains and losses guide"

ACB Adjusted for cost of the quantity sole, matured, exercised or redeemed. Cost basis is adjusted for Return of principal, Original issue discount accrual and Partnership distribution on CDO's, REMIC's and MLP's. Transactions are now also adjusted for bond amortization, return of capital and liquidating distributions. If no adjustment is required, the ACB value will equal $0.

Then goes on and defines the "gain or loss" column: Realized gain or loss, which is Gross Proceeds minus ACB.

In this case, $50694 Gross Proceeds minus $8291 ACB = $42403 yet the under the Gain and Loss column it has ($8105).......This is the amt reported to the IRS, correct?

How do you go from a $50931 Orig Cost Basis down to a $8291 yet under the 1099-div, there is $55 Cap gains and $133 of non div distributions.

Take a stock with a 2 for 1 split: Original stock cost basis $10 now FMV is $20. 2 shares with a cost basis of $10 and FMV of $40. Any divs would be reported under Sch B and NOT factored into the capital gain.

Corp Bond: Bond purchased at $900. Matures at $1000. $100 Sch D gain and interest reported on Sch B and NOT factored into capital gain.

[Gary2]

How do you go from a $50931 Orig Cost Basis down to a $8291 yet under the 1099-div, there is $55 Cap gains and $133 of non div distributions.

The adjustments would have accumulated over the years, so I don't see why you're depending on the current year 1099-DIV.

Corp Bond: Bond purchased at $900. Matures at $1000. $100 Sch D gain and interest reported on Sch B and NOT factored into capital gain.

For this example (assuming more than one year, and ignoring coupon interest), the appropriate part of the $100 would be taken as OID interest on Schedule B , but the bond basis would be adjusted up each year, until reaching $1000 at maturity, so zero capital gain.

[AZ-Tax]

Well even the Reg Rep who sold my client MF's is puzzled

I had him pull the same documents I had in front of me and was he confused. Typical, he wanted me to call his tax dept etc. and I replied, I most likely will not be the last tax preparer and/or client inquiring about this "adjusted cost basis" and he agreed so he was suppose to call and get back to me. That was 8 hours ago. I should have had my client call him in my office via conference call. He probably would have replied with some Bull S***t to my client like, your tax should know this...blah blah...

[FEDUKE404]

Question

Are you at liberty to say WHAT was sold???

Without knowing more, it sounds as if something has been adjusted "over the years."

A case comes to mind for something such at BPT, a royalty trust which can currently be bought/sold on stock exchanges.

Each year there is a (fairly) complicated procedure to go through ("dividends" do not go on Sch B but rather, eventually, to Sch E). Due to depreciation issues, client now has cost basis at zero, even though he obviously "paid" a bit more. It's not quite the same as returns of capital, but does monkey around with the cost basis.

Good luck!

FE