1099-B Short-term/Long-term categorization issue with stock sales

I'm having a weird issue with my 1099-B from Robinhood that I'm hoping someone here can help with while I wait for their support to get back to me. I was inputting all my trades into FreeTaxUSA and everything seemed fine with my short-term transactions. But when I got to what my 1099-B lists as long-term transactions, something seems off. The form shows a stock purchase with Date Acquired as 07/12/2023 and Date Sold as 07/15/2023 - literally just 3 days apart! I double-checked my trading history in the app and these dates are accurate. FreeTaxUSA flagged this because the dates clearly don't match with how it's being reported on the 1099-B as Form 8949 category D (Long-term). Should I override what the 1099-B says and change it to category A (Short-term), or should I just leave it exactly as reported on the 1099-B even though the dates don't make sense for a long-term classification? Looking deeper, I noticed something even stranger. This particular stock seems to have been split into two transactions. I originally purchased 1250 shares, but the form shows 875 shares as one transaction (the problematic "long-term" one), and the remaining 375 shares as another transaction with identical dates but correctly labeled as short-term. I have a few other trades of this same stock from late October that are handled the same odd way, except those list the acquisition date as "Various" instead of a specific date.

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18 comments

Keith Davidson

•8M

This is definitely a reporting error on Robinhood's part. According to tax rules, a long-term capital gain/loss only applies when you've held the asset for more than one year. With your purchase and sale dates only 3 days apart, this should 100% be classified as a short-term transaction (Form 8949 category A). The split transaction issue is likely due to wash sales or partial lot selling, but the categorization as long-term is definitely incorrect. When your broker makes a mistake on your 1099-B, you should report the transaction correctly on your tax return rather than perpetuating the error. I'd recommend entering it as a short-term transaction with the correct dates, but add a note in your tax software explaining the discrepancy between your reporting and the 1099-B. This creates a paper trail showing you made a good faith effort to file correctly.

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Keith Davidson

•8M

The IRS computer system will notice the discrepancy, but that doesn't automatically trigger an audit. What matters is that you're accurately reporting the transaction according to tax law. Adding a clear explanation in your tax software creates documentation that you identified an error and corrected it rather than trying to hide something. The IRS is generally reasonable when taxpayers make good faith efforts to file correctly, especially when the math works out properly and you're not trying to evade taxes.

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Ana Erdoğan

•8M

I had a similar issue with Robinhood last year! Their 1099-Bs are notoriously problematic. I used https://taxr.ai to analyze my forms and it immediately flagged this exact discrepancy. It saved me hours of trying to reconcile everything manually and even generated a letter explaining the corrections I made to attach to my return. The tool pulled all my trade data together and correctly categorized everything as short-term or long-term based on the actual hold periods, not what was incorrectly reported. The best part was that it created an audit defense file with documentation of all the errors on my 1099-B.

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Sophia Carson

•8M

Just wanted to follow up and say I tried taxr.ai after seeing this thread and wow! It instantly identified the same short-term/long-term classification error in my 1099-B from Robinhood. I had no idea how many mistakes were in my forms - there were 12 transactions incorrectly categorized as long-term when they were clearly short-term based on the dates. The best feature was that it generated an attachment for my tax return explaining all the corrections with citations to the relevant tax code sections. My accountant was incredibly impressed with how thorough the documentation was. Definitely saved me from a potential headache with the IRS!

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Brooklyn Foley

•8M

If you're still waiting for Robinhood to respond, I'd recommend trying Claimyr (https://claimyr.com) to get through to them faster. I spent weeks trying to get someone at Robinhood to help with my incorrect 1099-B last year and was getting nowhere. Claimyr got me connected to an actual human at Robinhood in under 15 minutes when I'd been trying for days. They have a great demo video showing how it works: https://youtu.be/_kiP6q8DX5c The Robinhood rep I spoke with confirmed they had a known issue with some transactions being incorrectly classified as long-term when they were actually short-term. They issued me a corrected 1099-B within days after I finally got through to them.

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Elijah Knight

•8M

Well I owe Claimyr an apology. After my skeptical comment I decided to try it anyway since I was desperate to resolve my Robinhood 1099-B issues before filing taxes. Got connected to a Robinhood tax specialist in about 20 minutes when I had previously been on hold for 2+ hours and gave up. The Robinhood rep admitted they had a system issue where certain lots were incorrectly classified based on FIFO calculations. They're sending me a corrected 1099-B that should fix the short-term/long-term categorization problems. Definitely worth the convenience to not waste hours on hold!

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Jessica Suarez

•8M

Something similar happened to me but with Fidelity. Try checking if you had any wash sales during the year. Sometimes when you rebuy a position after selling at a loss, the holding period of the original purchase carries over to the new position in certain calculations. This is why sometimes a position held for just days shows up as long term. I'm not saying that's definitely what happened in your case, but it's worth checking your complete trading history to see if there were previous purchases of the same stock that might be affecting how this is reported.

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Taylor Chen

•8M

I hadn't considered wash sales affecting the holding period classification! I'll definitely look back through my history to see if I had previous transactions in this stock. That actually makes a lot of sense because I was actively trading this particular ticker throughout the year, so there's a good chance I triggered some wash sales along the way. Would that really change the Form 8949 category though? I thought wash sales just affected the basis calculation, not the short-term/long-term classification.

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Jessica Suarez

•8M

Wash sales primarily affect your cost basis by disallowing the loss, but they can also affect holding periods in certain circumstances. If you repurchase shares within 30 days of selling at a loss, the holding period of the original shares can sometimes be added to the new shares. This is a complex area of tax law and brokers often handle it differently. Some brokers calculate everything properly, while others (especially the free trading apps) often make errors in reporting. Your situation sounds like a reporting error rather than a legitimate holding period adjustment, but it's always good to check your complete trading history to be sure.

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Marcus Williams

•8M

This exact problem happened to me! It's because of lot relief methods. Did you ever select specific lots when selling partial positions? If not, Robinhood defaults to FIFO (first in, first out), but sometimes their system glitches and applies LIFO (last in, first out) or average cost. If you go to Account > Statements > Tax Documents > Trade Confirmations for 2023, you can see exactly which lots were sold with each transaction. Then compare that to the dates on your 1099-B.

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