Fix IBKR 1099-B Adjusted Options: Cost Basis Guide

A "close-only" entry hits your IBKR 1099-B when a corporate action—special dividend, merger, spin-off, or split—rewrites your option contract mid-position. The OCC adjusts the deliverable, strike, or multiplier, IBKR closes out the original contract, and the cost basis that lands on your 1099-B no longer matches anything in your records. The fix: recalculate the adjusted basis from the official OCC adjustment terms, then correct the broker-reported numbers on Form 8949 with adjustment code B.

This guide covers that specific failure mode—adjusted contracts only. Standard expirations, assignments, spreads, and rolls are standard mechanics, and they are worked through in our Complete Options Tax Guide and Interactive Brokers Tax Statement Guide. What follows assumes you know the basics and are stuck on a contract that changed underneath you.

What Creates a "Close-Only" Adjusted Option at IBKR

Listed options are standardized: 100 shares per contract, round-number strikes. A corporate action breaks that standardization. The OCC—the clearinghouse for US options—issues an adjustment memo that can:

• Reduce strikes by a special cash dividend amount
• Change the deliverable from 100 shares to a mix of shares and cash (mergers), shares of a spun-off entity, or a reduced share count (reverse splits)
• Change the contract multiplier so the total dollar value of the contract stays intact
• Retire the original contract to close-only status while trading moves to the adjusted series

IBKR books this as a closing of the legacy contract against the adjusted one. On the 1099-B, that produces entries where proceeds, basis, or the computed gain still reflect the old contract terms while the position itself now lives under new terms. The dollar totals in your account are right; the per-line tax math is wrong until you rebuild it from the adjustment memo.

How to Spot an Adjusted Contract on Your 1099-B

Adjusted entries have fingerprints. Look for:

• Strikes that are not round numbers. A $137.50 or $142.25 strike on a stock that only trades $5 increments means the strike absorbed a special dividend.
• A symbol you do not recognize. Adjusted series often carry a modified root or a numeric suffix instead of the standard symbol.
• Proceeds or basis off by exactly the dividend or deal cash. If the gap equals the special dividend per share × 100, you are looking at pre-adjustment basis on a post-adjustment contract.
• A multiplier that is not 100. Reverse splits and mergers can set the deliverable to 10, 20, or 33 shares; if the 1099-B still multiplies by 100, proceeds are inflated by the same ratio.
• A close or expiration you never placed. IBKR closes the legacy contract when the adjustment takes effect, so the form shows an exit with no matching trade in your memory.

Any one of these means: stop reading the 1099-B at face value and pull the adjustment terms first.

Worked Example 1: Special Cash Dividend Adjusts the Strike

Setup: You sell a $150 strike cash-secured put on XYZ for $2.00 premium ($200 collected). XYZ declares a $10.00 special cash dividend. The OCC adjusts the contract: every strike drops by $10. Your put is now a $140 strike put, still on 100 shares.

XYZ falls, and you are assigned at the adjusted $140 strike.

Your 1099-B shows:

Proceeds (Box 1a):                $14,000 (adjusted $140 strike × 100)
Cost or other basis (Box 1b):     $200 (the premium you collected)
Gain/Loss (Box 2):                -$13,800
Code:                             Assignment / Exercise

Why the form is misleading:

• The $14,000 is the adjusted strike × 100—not cash you received. You paid $14,000 for the shares.
• Your real per-share basis is $140 − $2.00 premium = $138.00.
• The -$13,800 "loss" is the mechanical gap between assignment proceeds and premium, not an economic loss. Unadjusted put assignments create the same phantom loss; the Interactive Brokers Tax Statement Guide covers the standard version.

The correction that matters: the stock you now hold carries a $138.00 basis—not $150 (original strike) and not $140 (adjusted strike). If the 1099-B or your broker's basis feed shows either, report the correct $138.00 basis on Form 8949 with adjustment code B, or every future sale of those shares will be misstated.

Worked Example 2: Reverse Split Changes the Deliverable

Setup: You sell a $5 strike covered call on 100 shares of ABC for $0.40 ($40 collected). ABC executes a 1-for-10 reverse split. The OCC adjusts the contract: the deliverable becomes 10 shares and the strike becomes $50, so one contract still controls the same dollar amount of stock ($50 × 10 = $500).

The call finishes in the money and is assigned.

A broken 1099-B entry looks like:

Proceeds (Box 1a):                $5,000 ($50 strike × 100 — stale multiplier)
Cost or other basis (Box 1b):     your original 100-share basis
Gain/Loss (Box 2):                a gain roughly 10× too large
Code:                             Assignment / Exercise / Sale

What is actually correct: proceeds are $50 × 10 shares = $500, plus the $40 premium. The form inflated proceeds because it applied the old 100-share multiplier to the adjusted $50 strike.

The correction: verify the deliverable in the OCC memo (10 shares), recompute gain as ($500 proceeds + $40 premium) − your basis in the 10 post-split shares you delivered, and adjust on Form 8949 with code B so your return reconciles with the IRS copy of the 1099-B.

Reverse-split adjustments are the most common source of multiplier errors on the 1099-B, because the proceeds column is purely mechanical—strike × multiplier. When the multiplier is stale, every downstream number is wrong by the same ratio.

Recalculating Adjusted Cost Basis: The One Formula You Need

Corporate-action adjustments preserve total dollars. The per-unit numbers change; the aggregate never does. Rebuild your basis from that invariant:

• Assigned put (adjusted contract): per-share stock basis = adjusted strike − (premium collected ÷ new share count)
• Assigned call (adjusted contract): reportable proceeds = (adjusted strike × new deliverable) + premium collected, measured against your basis in the post-adjustment shares you actually delivered
• Expired or closed adjusted option: total premium dollars are unchanged; only the per-contract display changed. Report the total dollars.

The check that catches every error: total dollars in your activity statement (cash in and out around the event) must equal the total dollars implied by the 1099-B line. If they differ by exactly the dividend, the deal cash, or a clean 10× ratio, you have found the stale term.

Where to Find the Official Adjustment Terms

Never recalculate from the 1099-B alone. Three sources carry the authoritative terms:

1. The OCC infomemo. Every adjustment is published at theocc.com—search the underlying symbol and the corporate-action date. The memo states the exact new deliverable, strike, multiplier, and effective date. Save it with your tax records.
2. IBKR corporate action messages. Client Portal posts a corporate action notice for each affected position, and Trader Workstation shows the adjusted deliverable and multiplier in the contract details window.
3. Your activity statement. The IBKR activity statement shows the cash and share movements around the adjustment date—the ground truth your corrected math must tie to.

If the memo and the 1099-B disagree, the memo wins. Your job is to document the difference, not to average the two.

Reporting the Correction on Form 8949

When broker-reported basis or proceeds are wrong for an adjusted contract:

1. Enter the 1099-B line as reported in columns (a)–(e) of Form 8949.
2. Use adjustment code B in column (f)—basis shown on Form 1099-B is incorrect.
3. Enter the correction in column (g): a positive amount that reduces the reported gain to the true figure (or negative if the form understated your gain).
4. Keep the OCC infomemo, the IBKR corporate action notice, and the activity statement with your tax file. If the mismatch is large, a short disclosure statement (Form 8275) describing the adjustment prevents a matching-notice cycle with the IRS.

TurboTax and H&R Block both expose this as "the basis reported by my broker is wrong" during 1099-B entry. Use that path rather than silently editing imported numbers, so the adjustment code flows to Form 8949 automatically.

Reconciling the Rest of Your 1099-B

Adjusted contracts are usually the exception, not the rule. Standard expirations, early closes, assignments, and rolls make up most of the form, and those reconcile mechanically against your activity statement: match each 1099-B line to the trade, verify proceeds and basis, and confirm the holding period. The full line-by-line workflow—including CSV export and closed-positions matching—is in our Interactive Brokers Tax Statement Guide. Strategy-specific outcomes are covered in the Complete Options Tax Guide and the covered call tax rules guide.

1099-B Codes Worth Knowing for Adjusted Contracts

The code column on the 1099-B tells you which mechanic produced the line:

Code	Meaning
A	Acquisition (you bought something)
D	Disposition (you sold something)
E	Exercise (option was exercised/assigned)
X	Expiration (option expired)
W	Wash sale loss disallowed
F	Fractional shares

For adjusted contracts, expect code E (assignment) or X (expiration) on the adjusted line. Do not confuse these with Form 8949 adjustment codes like B—that is a different code, on a different form, that you add yourself.

Common Mistakes With Adjusted 1099-B Entries

1. Mixing contract versions. Proceeds = strike × multiplier, and both must come from the same version of the contract. Pairing the adjusted strike with the old multiplier (or the reverse) produces clean 10× errors.
2. Basing assigned stock on the pre-adjustment strike. Stock basis follows the adjusted strike minus premium. Using the original strike misstates every future sale of those shares.
3. Ignoring the deliverable. If the contract delivers 33 shares plus $120 cash, a 100-share assumption breaks both proceeds and basis.
4. Trusting tax-software imports on adjusted lines. Import tools carry the broker's stale basis into Form 8949 without flagging it. Verify every adjusted-contract line manually—the phantom gain or loss will otherwise file as-is.

Bottom Line: Adjusted Contracts Preserve Dollars, Not Display

1. A close-only entry means a corporate action rewrote your contract. The tax form is describing two contracts as one line.
2. Total dollars are invariant. Rebuild every per-unit number from the OCC memo's deliverable, strike, and multiplier, then tie to your activity statement.
3. Fix the basis on Form 8949 with code B, and keep the infomemo and corporate action notice as documentation.
4. Everything else on the form is standard. Expiration, assignment, and roll mechanics live in the sibling guides linked below—spend your attention on the adjusted lines, where real misreporting happens.

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Related Articles

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• Wash Sale Rules for Options Traders

• Assigned Options Tax Reporting

• Wash Sale Calculator the picture with the guides that cover the standard mechanics this article deliberately skips:

• Complete Options Tax Guide – Standard expiration, assignment, and spread reporting with premium treatment

• Interactive Brokers Tax Statement Guide – Reconcile IBKR activity statements against your 1099-B line by line

• IRS Publication 550 Covered Calls: 2025 Tax Rules – Assignment, rolling, and holding-period rules for covered calls

• Wash Sale Rules for Options Traders – How rolling trades and similar positions trigger wash sale adjustments

• SPX Options Tax Treatment: Section 1256 Explained – Why index options sidestep most of these 1099-B problems

• Options Tax Calculator – Estimate the tax impact of your corrected numbers

Expertise: Written by a CPA with 10+ years of options tax experience and reviewed against current IRS 1099-B guidance.

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