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I have an account at Fidelity. Last year I sold some Treasury Bills before they matured. Some of the sales were gains and others were losses.

When I got my Fidelity tax package, it showed the gains as interest on 1099-INT alongside the interest earned by T-Bills that had simply matured. However, it doesn't show the losses anywhere.

Is this reporting correct? Why are the losses not reported anywhere and what do I do about this?

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    What does Fidelity say?
    – RonJohn
    Commented Feb 14, 2023 at 3:11
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    Does the gain they reported match the gain on the ones that were sold for a gain, or could they have netted out the gains and losses in one line item?
    – D Stanley
    Commented Feb 14, 2023 at 17:11
  • The gains only match the transactions that were sold at a gain. The transactions that resulted in a loss do not appear anywhere. They are not netting anything. Fidelity initially said this was a known bug in their reporting when I reported this last year. Now that tax time is upon us, they claim they don't have to report it at all.
    – sam
    Commented Feb 15, 2023 at 6:25
  • There isn't enough information here about what you bought and when you bought & sold the T-Bills. Just want to confirm you bought 52week and under T-Bills and how they were bought (competitive/non-competitive bid). The old 2021 Pub 550 has and entry on Treasuries and irs.gov/tax-exempt-bonds/bond-holders has links to other possible documents especially OID-Pub 1212
    – Morrison Chang
    Commented Feb 15, 2023 at 8:22
  • The T-bills were bought and sold at Fidelity. These are all secondary market transactions. All T-Bills are 52-week and under. Fidelity is only reporting the transactions that resulted in a gain. The entire gain is reported as interest on 1099-INT. Fidelity is ignoring the loss transactions entirely - as if they didn't happen. I think they have to report all transactions and show the losses as short-term capital losses.
    – sam
    Commented Feb 16, 2023 at 16:59

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I'm currently doing some research on how T-Bills are reported at the state tax level, and from my findings those T-Bills you sold at a gain should be reported as capital gains, not as interest income. However, Pub 550 pg. 15 seems to have conflicting information on that. (Edit) Further research indicates that both are true, depending on circumstances. If you don't have TR Checkpoint, the article demonstrates that the difference between acquisition and sales price which can be attributed to accrued interest can still be reported as interest, but anything exceeding the pro-rated interest would be considered a capital gain.

That being said I would be very interested to see how Fidelity ended up handling this. If you could update us, I would greatly appreciate it!

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  • Fidelity handled this as stated above. All gains were reported as interest and losses were ignored. I went back and forth with them for a while, but they insisted their reporting was correct. My tax preparer said the losses should have been reported, but I didn't claim them on my taxes since the Fido forms didn't show the losses.
    – sam
    Commented Jan 10 at 13:09

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