Steps to Fix the Error in TaxWise
Open the Tax Return
Launch TaxWise and open the affected tax return.
Navigate to the Capital Gain Worksheet
Locate the Capital Gain Worksheet (linked to Schedule D) in the forms list.
Review the Transaction Code
Look for any transactions labeled with:
Code A (Basis reported to IRS - Short Term)
Code B (Basis not reported to IRS - Short Term)
Code C (Short-term transactions not reported on 1099-B)
Check the purchase date (Date Acquired) and sale date (Date Sold) for each transaction.
Determine Holding Period
If the security was held for more than one year, it should be classified as long-term.
Long-term transactions should be coded as:
Code D (Basis reported to IRS - Long Term)
Code E (Basis not reported to IRS - Long Term)
Code F (Long-term transactions not reported on 1099-B)
Correct the Entry
If the purchase date is more than one year before the sale date, change the code to D, E, or F for long-term treatment.
If the transaction is truly short-term, verify that the purchase date is within the last calendar year.
Validate and Resubmit
Run Diagnostics in TaxWise to check for errors.
Save and resubmit the return once corrected.
Key Takeaways
✅ Short-term gains (held ≤ 1 year) should be coded as A, B, or C.
✅ Long-term gains (held > 1 year) should be coded as D, E, or F.
✅ Ensure the correct purchase and sale dates match the proper holding period.
✅ Run diagnostics before submitting the return.
By following these steps, the error will be resolved, and the return can be processed correctly! 🚀