Muni Bond Liquidation: How to report Long-Term Covered "Liquidation" $0 proceeds $$ basis & Long-Term Noncoverd "Return of Principal" $$ proceeds N/A basis? Merge?

Forum|Forum|3 years ago
April 4, 2023
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Cost basis and acquisition date has been reported but the proceeds are on the 1099-B Unknown Term Gains/Losses. The date sold for the covered liquidation is one day later than the date sold for the noncovered return of principal. Can this transaction be combined (it is a loss), is it covered or noncovered, and what about the sold date? Thank you for your help!

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DianeW777

Yes, you can enter them in one transaction if they are both under the same holding period. Select 'noncovered' as the type so that the IRS knows that not all of the cost basis has been reported to them (which is what noncovered means).

Long term gains, defined as those held for more than one year, generally have more advantageous tax characteristics than short-term gains, which are held for one year or less.

The sold date should be the date that is shown on the 1099-B.

The purchase date can be 'V' for various to cover both.

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