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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Paul Senior who wrote (5734)10/21/2020 5:32:35 PM
From: Elroy  Read Replies (1) of 5810
 
Your trade information is reported to both you and Fed gov by broker on Form 8949 and/or 1099B, which info you summarize as taxpayer on Schedule D. in your tax forms. Broker reports 8949 in sections: long term gain/loss, short term gain/loss, missing info (cost basis unknown for example). You do not have a choice as to allocate shares at this point.

I understand the concept. But if the broker reports the trade information to the government one way, and I decide to report it differently when I file.....do you know what law says the broker's method is correct and my chosen method is incorrect?

That's what I'm asking.

If I chose to determine which lot I sold, and my choice is different than the broker's automated method, what law say the broker is correct and I'm incorrect? I could get audited, but as long as over the years I only report each purchase as a cost basis one time, perhaps my audit would show nothing wrong, only that I deviated from the broker's standard reporting method.

This is why I'm wondering if you know the specific law that leads you to believe you must follow the broker's method of determining cost basis when filing taxes. I'm curious if it's a requirement, or more of just the standard way that things are usually done, and has some "fudge factor" room.
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