How should I report UNDETERMINED TERM TRANSACTIONS FOR NONCOVERED TAX LOTS on my taxes?

The "undetermined term" designation on your 1099-B means your broker doesn't have enough information to classify whether these sales qualify as long-term or short-term capital gains. Since these are noncovered tax lots (meaning your broker isn't required to report the cost basis to the IRS), you'll need to determine this yourself. Here's how to handle it: First, you need to determine when you purchased these securities. If you've held them for more than a year before selling, they're long-term; if less, they're short-term. Check your purchase confirmations or statements from when you bought them. Once you know the term, report them on Form 8949. You'll need to check box C (for noncovered securities with short-term gains/losses) or box F (for noncovered securities with long-term gains/losses). Then list each transaction, including a note that the basis was not reported to the IRS. You'll then transfer the totals to Schedule D. Keep good documentation on how you determined the purchase dates and cost basis in case of an audit.

I went through this exact nightmare last year with some old stock my grandparents gave me decades ago. After hours of frustration, I found taxr.ai (https://taxr.ai) which literally saved my sanity. You upload your documents and it helps identify whether transactions are short or long term based on your history. It even helped me establish a reasonable cost basis for securities where I had incomplete records by analyzing my transaction history and suggesting the most likely purchase dates. The best part was that it actually explained WHY each transaction was classified a certain way, which gave me confidence when filing. Definitely worth checking out if you're dealing with undetermined term transactions.

Just wanted to update - I tried taxr.ai after posting my skeptical question above, and I'm actually impressed. It sorted through my mess of undetermined term transactions and identified which ones were genuinely long-term based on my account history. It caught several transactions my broker had marked as "undetermined" that were clearly long-term (over 5 years old!), which saved me a significant amount in taxes by getting the lower rate. The documentation it generated explaining each classification decision will be super helpful if I ever get questioned. Definitely less stressful than the manual spreadsheet method I was trying before.

Anyone else just completely fed up with trying to get help from the IRS on these complicated tax lot issues? I spent THREE HOURS on hold last week trying to ask about this exact same undetermined term issue, only to have the call drop. I finally discovered Claimyr (https://claimyr.com) - they actually get you through to a real IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was seriously skeptical, but they got me connected to an actual IRS representative in about 20 minutes who walked me through exactly how to report my noncovered securities with missing basis information. The agent even emailed me the specific publication sections that covered my situation.

Well I'm eating my words on this one. After posting my skeptical comment yesterday, I decided to try Claimyr out of pure frustration after another dropped call with the IRS. It actually worked exactly as described. Got a call back around 40 minutes later with an IRS tax specialist on the line who explained the correct way to report my undetermined term transactions. The agent confirmed I should use Form 8949 with box C or F checked depending on if I determined they were short or long term, and also explained I need to use code B in column (f) to indicate the basis wasn't reported to the IRS. This was information I couldn't find clearly explained anywhere online. Worth every penny for the time saved!

I think everyone's missing something important here. For noncovered tax lots, you're REQUIRED to make a good faith determination of whether they're short or long term. The "undetermined" label from your broker doesn't give you a free pass to choose whichever is more advantageous tax-wise. If you know when you bought the security (or have a reasonable way to determine it), you MUST report it as either short or long term based on the actual holding period. Only if you truly have no way to determine the acquisition date might you have a special case - and even then, the IRS default position would likely be to treat them as short-term.

Has anyone tried using the specific ID method for figuring out which shares you sold? I'm dealing with multiple purchases of the same stock over years and some sales are showing up as undetermined. My broker is telling me to use FIFO (first in, first out) but I think that's going to result in a higher tax bill.

This is exactly the situation I found myself in last tax season! What helped me was creating a detailed spreadsheet tracking all my transactions. For the undetermined term lots, I went back through old account statements and trade confirmations to establish purchase dates. One tip that saved me time: if you have dividend reinvestment records, those often contain the purchase dates for fractional shares that might be causing some of the "undetermined" classifications. Also, don't forget that for inherited securities, you get a stepped-up basis to the fair market value on the date of death, and the holding period is automatically considered long-term regardless of how long you actually held them. The key is being systematic about it. I used Form 8949 with the appropriate boxes checked (C for short-term noncovered, F for long-term noncovered) and made sure to include code "B" in column (f) to indicate the basis wasn't reported to the IRS. Keep all your documentation - the IRS may not have the broker's records, but they can still ask you to substantiate your positions.