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Author Topic: 1099s are out  (Read 32668 times)

littlehouse

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Re: 1099s are out
« Reply #15 on: January 30, 2012, 02:02:41 pm »

The recoveries showing up on the 1099-B confused me.

WTF?  I feel like Prosper made up a bunch of numbers for my 1099 this year.  Am I missing something?

That is exactly how I felt initially.  After Mothandtrust pointed out the connection on his one loan to recovery payment interest I at least believe my 1099-B amounts are closely connected with such interest payments that I received in 2011.  Even so, this is still very puzzling to me, even without any of the doubles.
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mothandrust

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Re: 1099s are out
« Reply #16 on: January 30, 2012, 03:23:18 pm »

I have ten of them.  I checked most of them and those I checked all made one or more collection payments in 2011.  The "sale" amount stated on the 1099-B on most seems almost, but not quite, equal to the total interest payments minus fees.  Is this how interest from in-collection loans is reported and taxed - as short and long term capital gains?

I always thought that if you wrote off a security as being worthless in one year and then (miracle of miracles) the worthless security provided you with income, then this income was fully taxable at your highest marginal rate, not given preferential capital gains treatment.

In 2010, for example, the eandr123 loan made a payment a couple of days after the charge-off date (November 2010), and Prosper reported it as straight interest, not an LTCG.

Maybe they think they can play fast and loose with the IRS they do with the LRA?
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mothandrust

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Re: 1099s are out
« Reply #17 on: January 30, 2012, 03:32:56 pm »

http://www.prosper.com/help/investing.aspx#taxes
Quote
Charge-offs and gross proceeds from any bad debt sale to a third party will be reported to investors in a year-end investor statement, and debt sales will be filed on tax form 1099-B. Using the loan principal balance before sale and the sale amount, investors can calculate their net amount of loss for the year. Investors are encouraged to consult their tax advisor to determine their tax basis on loans sold to debt buyers.

Delinquent (late) loans which have not yet been sold to a debt buyer will have no impact upon taxes until further action on these loans takes place.

The "Date of sale or exchange" for the eandr123 loan was reported as Nov-01-2010 which is the charge-off date, but we know that it wasn't sold to anyone then.
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mothandrust

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Re: 1099s are out
« Reply #18 on: January 30, 2012, 03:49:18 pm »

Let's see what Customer Support  has to say...

Quote
I believe my 1099-B is in error.

I am a lender on Loan 29218-9 that was originally made in April 2008 and was charged-off on Nov 1, 2010.  The borrower continued to make payments in 2010, and Prosper duly reported the "Interest Income" on my 1099 issued in year 2010.

On my 1099 for 2011, however, Prosper is saying that the loan was sold on Nov 1, 2010 and reported there is a Long Term Capital Gain equal to the payments (less fees) made in 2011.

The box "Sales Price" is checked on the 1099, but the loan was never sold to anyone.

Since Prosper is still passing through interest and principal (less BOTH 1% servicing fees AND 27% collection fees), the Note is obviously not worthless, has not been sold to a third-party, so and these distributed amounts cannot be reported to IRS as Long Term Capital Gains from a "sale" that never happened.

Please correct my 1099 accordingly, and adjust the double fees if you agree with me that these are incorrect based on the LRA.

Thank you,

mothandrust

ETA 2/10/12: Prosper responds...

Quote
Dear XXXXXXXX,

You have simply earned gains on a charged off loan.

For future reference, your Prosper support case number is 00577843.

Sincerely,
Prosper Customer Support

So Prosper is reporting payments made after the charge-offs as "interest income" in one tax year and as capital gains the next year?  What will they count as in 2012?

And note the non-response on the 1% + 27% servicing and collection fee issue.
« Last Edit: February 10, 2012, 11:21:20 am by mothandrust »
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Beerbud1

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Re: 1099s are out
« Reply #19 on: January 30, 2012, 06:16:40 pm »

According to the 1099, that I just printed out I had $568.50 of recoveries.
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DCS

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Re: 1099s are out
« Reply #20 on: January 30, 2012, 07:45:45 pm »

Beerbud, I'd compare that to what Prosper's My Account --> History --> Account Transactions says.

On mine (much smaller numbers than your account) if I go to the Account Transactions page, select Recovery as the purpose and wrap the dates around 2011, then copy/paste the resulting chart into Excel, I get 22 transactions that total a sum of $10.20 in recoveries.

Prosper's 1099-B lists five recoveries (two are identical) and one $1.35 charged-off loan that have a sale price of $0.27 in short-term and $11.89 in long-term.

For the small numbers in my account, it's not such a big deal, but for folks like Beerbud I imagine the difference could be significant.

ETA: corrected my description of the 1099-B
« Last Edit: January 30, 2012, 07:51:47 pm by DCS »
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Beerbud1

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Re: 1099s are out
« Reply #21 on: January 30, 2012, 07:53:41 pm »

Beerbud, I'd compare that to what Prosper's My Account --> History --> Account Transactions says.

On mine (much smaller numbers than your account) if I go to the Account Transactions page, select Recovery as the purpose and wrap the dates around 2011, then copy/paste the resulting chart into Excel, I get 22 transactions that total a sum of $10.20 in recoveries.

Prosper's 1099-B lists five recoveries (two are identical) and one $1.35 charged-off loan that have a sale price of $0.27 in short-term and $11.89 in long-term.

For the small numbers in my account, it's not such a big deal, but for folks like Beerbud I imagine the difference could be significant.

ETA: corrected my description of the 1099-B

Hmmmm, i did what you said, I think I did it right and it gave me $434.37.
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DCS

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Re: 1099s are out
« Reply #22 on: January 31, 2012, 05:11:06 pm »

I had sent an e-mail about the 1099 to Prosper as well Sunday morning.  Still no official reply on Prosper's message system, but they did update my Consolidated Form 1099.

The updated 1099 eliminates the duplicate item I mentioned earlier.  It still differs from the result of simply adding the recoveries listed on Prosper.com account transactions in that:
(1) one loan for which I received recoveries is not mentioned on the 1099.
(2) the other loans have recovery totals on prosper.com that differ from the 1099 amounts by a few pennies.

I don't agree with the 1099, but considering my total is under $10, I think I'm just sending it in the way Prosper reported it to the IRS, as long-term capital gains.
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littlehouse

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Re: 1099s are out
« Reply #23 on: January 31, 2012, 05:54:25 pm »

the other loans have recovery totals on prosper.com that differ from the 1099 amounts by a few pennies.

I also see differences of a few pennies.

I don't agree with the 1099, but considering my total is under $10, I think I'm just sending it in the way Prosper reported it to the IRS, as long-term capital gains.

That is in our favor, isn't it?
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Beerbud1

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Re: 1099s are out
« Reply #24 on: January 31, 2012, 08:17:42 pm »

I too, got an Updated 1099 today as well. Imagine What this forum has done to keep a watchful EYE on Prosper. The newer version is more than $100 less.
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Xenon481

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Re: 1099s are out
« Reply #25 on: January 31, 2012, 08:42:09 pm »

Never trust a financial company that cannot properly do basic financials.......

ira01

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Re: 1099s are out
« Reply #26 on: January 31, 2012, 10:45:41 pm »

Never trust a financial company that cannot properly do basic financials.......

+1.
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Investar

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Re: 1099s are out
« Reply #27 on: February 01, 2012, 09:25:33 am »

So yesterday I got twin (duplicate) emails announcing my 1099 was available. The form duplicated my lone charge-off during the year showing it two times. This morning, as if nothing had happened, I got a email announcing my 1099 was available. Okay, so this is Prosper. I better go in and see what it says now.

Yup, quietly and without any mention whatsoever of any mistake, the form is corrected. My lone charge-off during the year shows one time. Shred the old, reprint the new. Any bets on what I'll get tomorrow? Any bets my long term loss is showing up three times at the IRS?

....another (+1) on the "trust" comment above
« Last Edit: February 01, 2012, 09:28:05 am by Investar »
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Urbi_et_Orbi

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Re: 1099s are out
« Reply #28 on: February 01, 2012, 10:10:04 am »

Lobby-worthy?
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Xenon481

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Re: 1099s are out
« Reply #29 on: February 01, 2012, 10:22:10 am »

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