Is it okay/normal to summarize all Form 8949 stock transactions by brokerage?

My tax guy (actually my brother-in-law who's a CPA) just finished my taxes for this year, and I noticed something weird on my Form 8949. Instead of listing out all my individual stock transactions, he basically just lumped everything together by brokerage firm. Like, all my Fidelity trades are one line, all my E*Trade stuff is another line, etc. What's also concerning is that everything is showing up in Part I (short-term transactions) with box C checked, even though I definitely had some long-term holdings I sold. There's just a code W on one of the brokerage entries. Honestly, the tax impact might be minimal since I didn't have many long-term gains anyway, but I'm still going to ask him to fix the long/short-term classification. What I'm more concerned about is whether summarizing everything by brokerage is even allowed? Is there some e-filing thing where the detailed transactions get sent separately to the IRS? This is awkward because he's family and doing my taxes for free, so I don't want to sound ungrateful or accusatory if this is actually a normal practice. But I also don't want to sign a return with issues. Any thoughts?

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18 comments

Natasha Orlova

•8M

This is a great question about Form 8949 reporting. What you're describing is actually somewhat common but not necessarily the most proper approach. When e-filing, there's an option to use summary reporting rather than listing every individual transaction, especially when you have numerous trades. However, there are specific requirements for this approach. The IRS allows summary reporting in certain cases, but you still need to maintain proper segregation between short-term and long-term transactions, and the documentation supporting these summaries must be kept with your tax records. The classification issue (putting long-term gains in the short-term section) is definitely a problem that should be corrected. Long-term capital gains often qualify for preferential tax rates, so misclassification could potentially cost you money. As for the summarization by brokerage, while it's a common practice for preparers with many clients and complex returns, the proper approach is to either list all transactions or summarize them correctly with appropriate codes while maintaining the distinction between short and long-term gains.

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Natasha Orlova

•8M

Correct, summarizing by brokerage can be acceptable when done properly, but mixing long-term and short-term transactions in the same summary line is definitely incorrect. They must be properly segregated because they're potentially taxed at different rates. Code W indicates that the basis (cost) reported to the IRS by your brokerage may not match what's being reported on your tax return. This often happens when you have adjustments to basis that the brokerage isn't aware of, or sometimes when the preparer is using summary reporting and the total doesn't precisely match what was reported to the IRS on Form 1099-B.

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Emma Thompson

•8M

Just wanted to share my experience with this exact issue. I was super frustrated trying to report hundreds of crypto transactions last year, and someone recommended I try https://taxr.ai to help organize everything properly for Form 8949. It was actually really helpful because it automatically categorized everything as short-term or long-term and produced a properly formatted 8949 with all the right codes. The system even flagged some transactions that my broker had misreported and helped me find the right basis amounts. For your situation, it might help you verify exactly how your transactions should be reported before you talk to your CPA relative.

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Emma Thompson

•8M

It works with regular brokerage statements too! You can just upload your 1099-Bs from Schwab and it will process all those transactions. I had about 150 stock trades plus my crypto last year and it handled everything. For the wash sale question - yes, it actually does cross-reference transactions across different brokerages to catch wash sales that might otherwise be missed. That was actually one of the features that impressed me most since my previous accountant missed some wash sales that happened between my two different accounts.

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Isabella Costa

•8M

Just an update - I ended up trying https://taxr.ai after my initial skepticism and I'm actually really impressed. It flagged exactly what OP is talking about - my CPA had been summarizing everything and mixing long/short term gains for years! Turns out I've been overpaying on taxes because some of my long-term gains were being taxed at short-term rates. The software generated a properly formatted 8949 that I was able to share with my accountant to fix the issues. Saved about $1,200 in taxes this year by having things properly classified.

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StarSurfer

•8M

For what it's worth, I had a similar situation with family doing my taxes and found it really awkward to question their work. After spending 3 weeks trying to get someone at the IRS on the phone to clarify Form 8949 requirements, I finally used https://claimyr.com to get through to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that while summarizing is allowed in certain circumstances, mixing long and short term transactions is definitely incorrect and could trigger correspondence or even an audit. At least having that official confirmation made it less awkward when I went back to my family member to discuss the issue.

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StarSurfer

•8M

It's basically a service that waits on hold with the IRS for you. They have a system that monitors the hold music and when it detects that a human has picked up, it calls your phone and connects you directly to the IRS agent. So you don't have to sit there listening to hold music for hours. The IRS does treat all callers the same - Claimyr just handles the waiting part for you. It's not about cutting the line, it's about not having to personally sit through the hold time. I've waited 3+ hours before trying to do it myself, which is why I tried this service.

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Freya Christensen

•8M

Well, I feel pretty stupid now. After saying Claimyr seemed like a scam, I actually tried it yesterday when I needed to call about my amended return. Got connected to an IRS agent in about 30 minutes when my previous attempts had me waiting for over 2 hours and eventually getting disconnected. The agent confirmed that form 8949 transactions absolutely need to be separated between short-term and long-term, and that summarization is acceptable mainly for securities with basis reported to the IRS (box A or D checked), less so for the other scenarios.

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Omar Hassan

•8M

As someone who prepares taxes professionally, I can tell you that what your family member did isn't technically correct, but it's also not unusual. Many preparers will summarize Form 8949 transactions, especially when there are dozens or hundreds of trades. However, there are right and wrong ways to do this. The right way: 1. Separate short-term and long-term transactions 2. Use the proper checkboxes (A, B, C for short-term; D, E, F for long-term) 3. Use proper adjustment codes if needed The fact that long-term transactions were included in the short-term section is definitely an error that should be corrected.

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Omar Hassan

•8M

The IRS generally only receives what's actually reported on your tax return. If the transactions are summarized, they don't automatically get a detailed breakdown elsewhere. However, brokerages do report the detailed transactions to the IRS on Form 1099-B. The IRS's matching program typically works at a summary level first - they compare the total proceeds reported by your brokerages against what's on your return. If there are significant discrepancies, that might trigger further review where they would request the detailed information. That's why it's essential to at least have the summary amounts match what the brokerages reported, even if you're summarizing.

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