Can I change a cost basis method retroactively?

Question

On Form 8949 of my 2017 tax return, I reported short-term (Box C) & long-term (Box F) "transactions not reported to you on Form 1099-B".

Will the IRS allow me to file an amended return that changes the cost basis methods that I used for these transactions?

Note: The assets I sold were cryptocurrencies. I'd change the cost basis methods to ones that are more tax-efficient, and thereby, claim a tax refund.

S Spring · Answer

I think a change in cost basis method only applies to closing trades dated after the change.

But to specify trade lots, just keep your own accounting of trades and give each opening trade a unique "ticker symbol". Then there is some optional match-up possible between the report received from the financial institution and the home accounting. If the official financial report goes to the IRS then additional codes might be needed on the 8949 or a letter of explanation might need to be included with the tax return. The accounting of specified trade lots should be kept as the trades are made and not organized later.

Well, if the entire position is not being sold then sell the specified lot that produces the smallest gain. Even a capital-loss carry-over is allowed to build-up  from one year to another. A tax credit is an asset.

Can I change a cost basis method retroactively?

One Answer

Add your own answers!

Ask a Question