1099-B: How to handle transactions where cost basis was NOT reported to the IRS?

When your 1099-B shows "Cost basis not reported to the IRS," you absolutely should still report your cost basis on your tax return! This happens commonly with older stock purchases or certain types of investments. Enter your actual cost basis based on your records - this is exactly why keeping good investment records is important. The checkbox simply means your broker didn't report this information to the IRS, not that you shouldn't report it yourself. When you're entering this in TurboTax, they'll have a specific section for entering securities where the cost basis wasn't reported. Make sure you select the appropriate checkbox or option that indicates this situation. You'll enter your proceeds (what you sold for) and then your cost basis from your records. This won't automatically trigger an audit. The IRS knows brokers don't always have complete cost basis information, especially for older holdings. Just make sure your records are accurate and you keep documentation of your original purchase price in case you're ever asked about it.

I had exactly this problem last year and I nearly pulled my hair out trying to figure it out! Then I discovered taxr.ai (https://taxr.ai) which saved me so much stress. It's a tool that analyzes your investment documents and helps interpret weird tax situations like missing cost basis. I uploaded my confusing 1099-B and other statements, and it helped me identify the missing information and explain the right way to report it. Their explanation was way clearer than anything I found online, and it walked me through exactly how to handle each transaction in my tax software. The best part was that it showed me how to document everything properly in case the IRS ever questions it. Totally worth checking out if you're dealing with these weird investment tax situations.

Ok I feel stupid but I need to admit I was wrong about taxr.ai - I ended up trying it after posting my skeptical comment. It actually helped me find some old statements I forgot I had access to and guided me through the whole basis reporting process correctly. The analysis pointed out that some of my transactions were actually wash sales (which I didn't realize) and that changed how I needed to report them. Would have totally messed this up without the help. It also explained exactly which forms and which lines needed the information, which made entering everything into my tax software way easier. Really appreciate the recommendation - saved me from making some expensive mistakes on my return!

If you're having trouble getting your cost basis sorted out, you might need to talk directly with the IRS. I spent WEEKS trying to get through to someone who could help me with this exact problem last year. After endless busy signals and disconnects, I finally found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in about 20 minutes. They have this system that navigates the IRS phone tree and waits on hold for you, then calls when an agent picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to confirm exactly how to report transactions with missing basis and explained what documentation I needed to keep. Saved me tons of stress wondering if I was doing it right.

I have to admit I'm completely shocked - that Claimyr thing actually worked! After posting my skeptical comment, I figured I'd try it just to prove it was BS. Well, I'm officially eating my hat with some hot sauce. Got connected to an IRS agent in about 35 minutes (was quoted 45-50), and they walked me through exactly how to handle my missing cost basis issues. The agent confirmed I should use my own records and explained exactly how to document everything properly. She even gave me tips on what specific notes to include with my return to head off any potential questions. Saved me hours of research and worry. Can't believe I wasted so much time trying to call them directly before.

Another option is to see if your brokerage can provide historical cost basis info even if they didn't report it to the IRS. I called Fidelity's customer service line and explained my situation, and they were able to look up my original purchase prices for stocks going back almost 10 years! They emailed me a statement showing the original purchases even though that info wasn't on my 1099-B. Might be worth trying before you go through a bunch of extra steps.

One thing to watch out for - if you use the wrong cost basis, you could end up paying too much or too little in taxes. If you pay too little and get audited, you'll owe penalties and interest. If you really can't determine the basis, IRS regulations say you should use $0 as your cost basis, which means you'll pay taxes on the entire sales price. That's the "safe" approach from an audit perspective, but obviously means paying more taxes than you might really owe.

Pro tip: If this is from crypto transactions, the rules are a bit different! Had that issue last year and nearly reported it wrong. For crypto without cost basis, you need to report it on Form 8949 with code B or E depending on how long you held it.

Don't panic about audit risk here. I'm a tax preparer and see this situation ALL THE TIME. Just report your actual cost basis based on your records, keep documentation of how you determined it, and move on. The "not reported to IRS" checkbox is mainly for the IRS's information, not a red flag or audit trigger. As long as your reported proceeds match what's on the 1099-B, you're fine. The IRS expects taxpayers to provide cost basis when brokers don't have it.

I've dealt with this exact situation multiple times! The "cost basis not reported to the IRS" checkbox is actually pretty common, especially for stocks purchased before 2011 when brokers weren't required to track cost basis for all securities. Here's what you should do: Use your own records to determine the cost basis and report it accurately on your tax return. When you enter these transactions in TurboTax, look for the option that says something like "Cost basis not reported to IRS" or similar - they have specific fields for this scenario. A few important points: - This won't trigger an audit just because the basis wasn't reported to the IRS - Make sure your sale proceeds match exactly what's on the 1099-B - Keep any documentation you have of your original purchase prices - If you're missing some records, try logging into your Fidelity account to see if you can access older statements or trade confirmations The key is to make a good faith effort to report the correct cost basis. Don't stress too much about this - it's a very routine situation that the IRS deals with constantly. Just be honest and thorough with your record-keeping.