Should I advise the IRS why amounts reported on Form 1099-B do not
agree with my Schedule D for proceeds from short sales of stock not closed
by the end of year that I did not include?
If you are able to defer the reporting of gain or loss until the year the
short sale closes, the following will allow you to reconcile your Forms 1099-B
to your Schedule D and still not recognize the gain or loss from the short
sale:
Your total of lines 3 and 10, column (d), on your Schedule D should equal
your total gross proceeds reported to you on all Forms 1099-B.
In columns (b) and (c) write "SHORT SALE," and
in column (f) write "See attached statement."
In your statement, explain the details of your short sale and that it
has not closed as of the end of the year. Include your name as it appears
on the return and your social security number.
For more on these rules and exceptions that may apply, refer to Chapter
4 of Publication 550, Investment Income and Expenses.
