Yes, you should advise the IRS why amounts reported on Form 1099-B don't agree with your Form 8949 for proceeds from short sales of stock not closed by the end of the year.
The instructions for Form 8949 and related publications provide guidance on how to handle discrepancies between the information reported on Form 1099-B and your own records. Specifically, if the basis shown on Form 1099-B is incorrect, you are instructed to make the necessary adjustments on Form 8949. This includes entering the correct information in the appropriate columns and providing an explanation for the discrepancy.
Additionally, if you receive a Form 1099-B that shows incorrect information and you are unable to get the form corrected by the broker, you should attach an explanation to your tax return and report your gain or loss based on your own records. This ensures that the IRS understands the reason for the discrepancy and can process your return accurately.
Therefore, it is important to provide a clear and detailed explanation to the IRS whenever there is a discrepancy between the amounts reported on Form 1099-B and Form 8949, especially for proceeds from short sales of stock not closed by the end of the year. This helps to avoid potential issues with your tax return and ensures compliance with IRS reporting requirements.
Sources:
Publication 1179 (10/2023)
2023 Instructions for Schedule D (2023)
Publication 544 (2023)
Instructions for Form 8949 (2023)
Publication 550 (2023)
Instructions for Form 1099-B (2023)
