Again, do not release your K1s until you have audited the numbers in
your books with what the brokers are reporting on your 1099s.  It has
been our experience that brokers miscategorize many types of
transactions such as stock splits and cash-in-lieu.  Tou may need to
recategorize your transactions, even though the 1099 is wrong, because
the brokers report these amounts to the IRS, and the IRS can't know
that what the brokers report is incorrect.

I disagree with the last sentence above. If there is a discrepancy between your club's records and the 1099s you receive, you should determine why the discrepancy exists and then report your numbers correctly. If the 1099 is wrong (this happens often with cash-in-lieu payments and other sales of fractional shares), you should make notes in your permanent files explaining the differences.

 

While it's highly unlikely the IRS will come calling on these differences, they will quickly accept your tax return "as-filed" if you can explain the differences.

 

Ira Smilovtz