Treasury Bills and 1099-B

Client purchased U.S. T Bills in August 2022 and sold them Nov 2022. The client lost $800 when all was said and done. This was was transacted through a major brokerage house. There is no interest income reported on the 1099-INT they issued nor does the sale appears on the 1099-B.

Client asks them why and they cite Reg. 1.6045-1(c)(xiii) which states, "Short-term obligations issued on or after January 1, 2014. No return of information is required under this section with respect to a sale (including a retirement) of a short-term obligation, as described in section 1272(a)(2)(C), that is issued on or after January 1, 2014."

Section 1272(a)(2)(C) is an exception to OID inclusion income for a debt instrument with a maturity less than a year.

I'm confused what needs to be reported here especially because the brokerage house isn't reporting anything. Should the purchase and sale in 2022 be reported on Form 8949 and shown as a short-term-loss with Box C checked?

Wouldn't your client have accrued and paid interest that would offset the loss a little? (paid by the buyer)

I'd report the interest on Sch B, exempt from state income tax.

I agree the loss should be reported on an 8949 with box C checked.

Keeping them "bundled" together on an 8949 wouldn't matter for federal, but it would for state.

The accrued interest paid and received and the sale should be shown in the many pages of supplemental stuff that come with the Consolidated 1099 or whatever the brokerage calls it.

It's really odd because the T Bills are not mentioned anywhere in the 12-page, year-end consolidated Tax Report containing the 1099-B, 1099-INT, or OID. Nor was the sale of them. It was the client that showed me the transactions in one of the monthly reports that triggered the question.

As I mentioned before, the brokerage house is a huge name in that industry. I plan on reporting the short-term sales on the 8949 and coding it "C".