Key Takeaways
- Reports gross proceeds from broker and barter transactions.
- Helps calculate capital gains or losses for tax returns.
- Filed by brokers for securities sales and barter exchanges.
- Issued by January 31 following tax year transactions.
What is Form 1099-B?
Form 1099-B, titled "Proceeds From Broker and Barter Exchange Transactions," is an IRS information return used by brokers and barter exchanges to report proceeds from securities sales, barter exchanges, and corporate changes. This form helps taxpayers accurately calculate their gains or losses on investments.
It summarizes transactions involving stocks, options, commodities, and other financial instruments, providing key data needed for filing capital gains on your tax return.
Key Characteristics
Form 1099-B conveys essential details about your investment transactions in a clear, standardized format.
- Transaction Reporting: Includes sales of stocks, bonds, options, and barter exchanges with proceeds and cost basis information.
- Covered vs. Noncovered Securities: Basis is reported for covered securities acquired after specific dates, aiding accurate capital gains tax calculations.
- Boxes and Codes: Contains boxes for property description, acquisition date, proceeds, cost basis, and gain/loss type using IRS codes.
- Reporting Deadlines: Issued by January 31 following the tax year to both the IRS and taxpayers.
- Barter Exchange Values: Reports fair market value (fair market value) of property or services exchanged.
How It Works
Brokers file Form 1099-B after selling securities on your behalf, reporting gross proceeds and cost basis to the IRS. This enables you to determine your realized gains or losses when completing Form 8949 and Schedule D on your tax return.
For barter exchanges, the form reports the value of traded goods or services, which you must include as income. The form differentiates short-term and long-term gains using specific IRS codes, affecting your tax rates accordingly.
Examples and Use Cases
Form 1099-B applies to various investment and transaction scenarios, illustrating its broad relevance.
- Stock Sales: Selling shares of SCHD mutual funds or individual stocks triggers reporting of proceeds and basis, helping calculate short- or long-term capital gains.
- Options Trading: Day traders (daytrader) must report gains or losses from options contracts on Form 1099-B, even for cash-settled transactions.
- Barter Transactions: Services exchanged through barter exchanges are reported at fair market value and treated as ordinary income.
- Corporate Changes: Transactions involving stock from mergers or acquisitions with companies like Delta generate 1099-B reporting to reflect changes in your investment basis.
Important Considerations
Accurately reviewing your Form 1099-B is critical to avoid errors on your tax return. Confirm that reported basis matches your records, especially for noncovered securities where you may need to supply cost information.
Be aware of potential backup withholding if brokers withheld taxes. Keeping thorough records ensures correct reporting of gains and losses, minimizing IRS inquiries or audits.
Final Words
Form 1099-B provides essential details for accurately reporting your investment transactions and calculating capital gains or losses. Review the form carefully against your records to ensure all information is correct before filing your tax return.
Frequently Asked Questions
Form 1099-B is an IRS information return that brokers and barter exchanges file to report proceeds from sales of securities, like stocks and options, or property/services exchanged through barter. It helps taxpayers calculate capital gains or losses on their tax returns.
Brokers must file Form 1099-B when they sell stocks, options, futures, or other securities on behalf of a client, and barter exchanges file it to report property or service swaps. It also covers certain corporate transactions and Qualified Opportunity Fund dispositions.
Brokers and barter exchanges must issue Form 1099-B by January 31 of the year following the transaction. For example, sales made in 2025 will be reported on a form sent by January 31, 2026.
Form 1099-B details the description of the property sold, acquisition date, sales proceeds, cost basis, and type of gain or loss. It distinguishes covered securities, where basis is reported to the IRS, from noncovered securities where basis may not be reported.
The form provides the necessary data to report capital gains or losses on your tax return using Form 8949 and Schedule D. It reports gross proceeds and cost basis so you can accurately calculate taxable gains or deductible losses.
Covered securities are those acquired after certain IRS dates—like stocks bought after 2011 or mutual fund shares after 2012—where brokers report the cost basis to the IRS on Form 1099-B. This helps ensure accurate capital gain reporting.
If the cost basis isn't reported (noncovered security), you may need to provide your own records to calculate gains or losses. Use Form 8949 to report the transaction and indicate that basis was not reported to the IRS.
Barter exchanges report the fair market value of property or services exchanged in box 13 of Form 1099-B. This value is treated as proceeds and must be included in your taxable income.
