NOTICE: This feature no longer exists in the current version of TradeLog.
The Form 8949 report menu provides an option to Include Adjustment Line to Reconcile Difference with 1099-B. For the 2011 and 2012 tax years this is selected by default for the Form 8949 report. This option is no longer available for 2014 tax years onward.
What is the adjustment line?
Selecting this option will include an adjustment line at the end of each Form 8949 Box A or D (covered securities) section, for Part 1 and Part 2. This adjustment line reconciles the difference between the cost basis reported by TradeLog for covered securities, and that reported by your broker(s) on 1099-B. See an example in the image below.
How is the adjustment line calculated?
TradeLog uses the amounts you entered for total reported cost basis for short term and long term securities on 1099-B and calculates the difference between the broker reporting on 1099-B and that generated by TradeLog from your actual trade history. This difference, if any, is reported as a separate line on the appropriate section(s) of Form 8949 with the adjustment code of "B" indicated. This adjusts your total reported cost basis on Form 8949 to equal that of your 1099-B reporting. The gain or loss is not altered as the cost basis adjustment is also added or subtracted into the adjustments column of Form 8949.
What is the purpose of the adjustment line?
The cost basis adjustment lines adjust the total cost basis reported on Form 8949 Part 1-A and Part 2-D in order to match what broker(s) reported on 1099-B. TradeLog uses actual trade history, and follows the rules for taxpayer reporting instead of simply using broker 1099-B (which cannot be used by most active traders and investors). As a result, there are many differences that result and it is often impossible to reconcile line by line with the 1099-B because of the inability to verify 1099-B reporting. Using the adjustment line the taxpayer is able to identify and report the total difference with the appropriate adjustment code, and the reported total cost basis will match with 1099-B.
Beginning with 2013 tax year, this adjustment line is no longer included by default. Instead the Statement Explaining Differences and Adjustments is the default option. However, users can select to use the adjustment line if they desire.
IMPORTANT NOTE ABOUT COST BASIS RECONCILIATION AND ADJUSTMENT:
TradeLog uses the 1099-B cost basis information entered by the user and therefore it is important you enter accurate totals when completing the Reconcile 1099 process. If you select to include the cost basis adjustment, please take note of the adjustment amounts being reported as you are ultimately responsible for your tax filing. It is possible that these adjustments can be large and if so you should understand why. You may wish to consider including a footnote or statement of explanation to the IRS to explain the reasons for the adjustment line, especially if it is large. Please refer to the last page of Form 8949 for additional information.