Capital loss reporting and redemption fee

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Topic Author
jlg
Posts: 71
Joined: Fri Apr 22, 2011 7:45 am

Capital loss reporting and redemption fee

Post by jlg »

HI All,

I received my 1099-B from Vanguard for my taxable account. I made one sale which involved exchanging Total International for FTSE All World ex-US to take advantage of some TLH back in September. This turned out to be a good move, as the fund was pretty close to the low for the year.

On the 1099-B it lists my sale price (Box 2) as $11,190.95. However, in my records (custom spreadsheet), in the Vanguard Cost Basis Summary (Realized Gains/Losses, 2011) and my 2011 Statement all show the proceeds for this sale at $11,019.54. At first I thought this might be a typo, but then I saw that the cents were also different.

I then realized that the difference is the result of the 2% redemption fee for selling Total International shares held for less than two months. This accounts for the $171 difference.

When reporting my loss to the IRS, how does the redemption fee fit in? Do I simply list the Box 2 value from the 1099-B and exclude the redemption fee or do I include the *total* loss as reporting on the Cost Basis Summary and my 2011 Statement? Note that no where can I find an actual reference to me having paid this redemption fee, but it does all add it.

Thanks.
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SpringMan
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Location: Michigan

Re: Capital loss reporting and redemption fee

Post by SpringMan »

Your loss should include the redemption fee. The loss should be the difference between the cost basis and what you actually realized from the sale.
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livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: Capital loss reporting and redemption fee

Post by livesoft »

I'd call up Vanguard and have them send you a corrected 1099B that includes the redemption fee.

Did Vanguard report the cost basis on the 1099B? If yes, did Vanguard add the 2% to the cost basis?
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dbr
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Re: Capital loss reporting and redemption fee

Post by dbr »

livesoft wrote:I'd call up Vanguard and have them send you a corrected 1099B that includes the redemption fee.

Did Vanguard report the cost basis on the 1099B? If yes, did Vanguard add the 2% to the cost basis?
Right. You want this amount to take effect on one or the other and want to see what the broker has done there.
Topic Author
jlg
Posts: 71
Joined: Fri Apr 22, 2011 7:45 am

Re: Capital loss reporting and redemption fee

Post by jlg »

livesoft wrote:I'd call up Vanguard and have them send you a corrected 1099B that includes the redemption fee.

Did Vanguard report the cost basis on the 1099B? If yes, did Vanguard add the 2% to the cost basis?
The 1099-B did not include cost basis information. I guess 2012 will for this fund, but 2011 did not.

I will give them a call, thanks.
Alan S.
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Location: Prescott, AZ

Re: Capital loss reporting and redemption fee

Post by Alan S. »

Redemption fees are usually based on the amount of the sale and $171 is closer to 1.5%. Perhaps the difference is caused by something else?
Topic Author
jlg
Posts: 71
Joined: Fri Apr 22, 2011 7:45 am

Re: Capital loss reporting and redemption fee

Post by jlg »

Alan S. wrote:Redemption fees are usually based on the amount of the sale and $171 is closer to 1.5%. Perhaps the difference is caused by something else?
Alan, only a portion of the shares sold were purchased in the 60 days preceding the sale. Other shares were older and thus not considered for the 2% redemption.
sscritic
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Re: Capital loss reporting and redemption fee

Post by sscritic »

And what do the instructions for Schedule D (and now Form 8949) say?

As I recall, not wanting to be burdened by actually reading, you can add expenses of this kind to the basis or subtract it from the proceeds (you can probably find both instructions if you search hard enough), but since Vanguard reports the proceeds but not the basis, I would adjust my basis. There is no need for a new 1099-B.

Where do you put your brokerage commissions? (I know, some people like livesoft don't pay commissions, so there is no reason for them to know what to do). :)





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P.S. jlg, these comments were not aimed at you, as you are a new poster. But you do want to learn to read IRS publications. Some of the other posters should know this off the top of their heads, and I know I looked it up before, but I can't pull it up right now.
kaneohe
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Re: Capital loss reporting and redemption fee

Post by kaneohe »

IRS supposedly uses the 1099B numbers to monitor compliance so it would be good to enter the box 2 numbers
as published and then enter adjustments (if necessary) on the cost basis entry so the actual loss comes out accurately.

from p. 10-6 of pub 4491
Sales Price
In box 2 on Form 1099-B, the stockbroker reports the sales price of the stock and checks a box to indicate
if the amount in box 2 is the sales price (gross proceeds) or sales price less commissions and option premiums (net proceeds):
• If sales price (gross proceeds) is checked, ask the taxpayer for the amount of commissions/fees paid
and add it to the taxpayer’s basis
• If sales price less commissions and option premiums (net proceeds) is checked, the broker already
subtracted the commissions and fees from the proceeds

http://www.irs.gov/pub/irs-pdf/p4491.pdf
Last edited by kaneohe on Thu Jan 19, 2012 6:22 pm, edited 2 times in total.
sscritic
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Re: Capital loss reporting and redemption fee

Post by sscritic »

So there are new instructions this year. (I can't stand not looking things up.)
Column (g)—Adjustments to Gain or Loss
Enter in this column any necessary adjustments to gain or loss. Enter negative amounts in parentheses. Also enter a code in column (b) to explain the adjustment. See How To Complete Form 8949, Columns (b) and (g), later.
Include in this column any expense of sale, such as broker’s fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (e). If you include any expense of sale in this column, enter “O” in column (b).
Instructions for Form 8949 (part of the Schedule D instructions)





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livesoft
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Re: Capital loss reporting and redemption fee

Post by livesoft »

What? You would fill out Form 8949 and let Vanguard get away with shoddy reporting? And you would have to answer endless new threads about Form 8949, too. :twisted:

OTOH, there appears to be no avoiding Form 8949 anyways. Sigh! Let's estimate how many threads we will have on this Form in the coming months. :)
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kaneohe
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Re: Capital loss reporting and redemption fee

Post by kaneohe »

Are there boxes in box 2 that indicate what the proceeds were? Which box was checked.....gross proceeds or net?

Since no cost basis was reported, then no gain/loss was reported so there would not be any "adjustment" to gain/loss and no codes would be necessary. Just do whatever is necessary to cost basis to make the loss come out right.
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