Form 1099-B: Proceeds From Broker and Barter Exchange Transactions – 2025 Guide

What Form 1099-B Is For

Form 1099-B is an information return used to report proceeds from the sale or exchange of stocks, bonds, mutual funds, commodities, and other securities through a broker, as well as exchanges of property or services through barter exchanges. If you've sold investments or participated in barter transactions during 2025, you'll receive this form from your broker or barter exchange by mid-February 2026.

Think of Form 1099-B as your broker's official record-keeping to the IRS. It documents transactions like selling 100 shares of stock, closing out futures contracts, or exchanging services through a barter network. The form reports crucial information including sale proceeds, cost basis (what you originally paid), acquisition dates, and whether your gains or losses are short-term or long-term—details that determine your tax liability.

Who files it

Who files it: Brokers, barter exchanges, and certain custodians file Form 1099-B with the IRS and provide copies to their customers. According to the IRS instructions, a broker includes anyone who regularly facilitates securities sales, including traditional brokerage firms, corporations redeeming their own stock, and entities that regularly issue and retire debt obligations.

Who receives it

Who receives it: Individual investors, traders, and anyone who sold securities or participated in barter exchanges receive copies. You'll use the information on Form 1099-B to complete your own tax return, specifically Form 8949 and Schedule D, where you report capital gains and losses.

Important 2025 update

Important 2025 update: Digital assets that are also securities (called "dual classification assets") are now generally reported on the new Form 1099-DA rather than Form 1099-B, though there are exceptions for certain types of transactions like section 1256 contracts and securities traded on limited access regulated networks.

When You’d Use Form 1099-B (Late/Amended)

Unlike forms that individuals file, Form 1099-B is issued to you by brokers and exchanges. However, understanding timing helps you plan your tax filing and recognize when corrections might be needed.

Standard timeline

Standard timeline: Brokers must send Form 1099-B to recipients by February 17, 2026 for the 2025 tax year (this is typically mid-February, adjusted for weekends). They must file with the IRS by March 31, 2026 if filing electronically, which most do. The IRS General Instructions for Certain Information Returns confirms these deadlines apply specifically to Form 1099-B.

When you receive late forms

When you receive late forms: If your broker sends a corrected 1099-B after you've already filed your tax return, you may need to file an amended return using Form 1040-X. According to IRS guidance on amended returns, you should file an amended return if the correction changes your tax liability, such as understated proceeds or incorrect cost basis that affects your capital gains.

Corrected forms (for brokers)

Corrected forms (for brokers): Brokers must file corrected Forms 1099-B if they discover errors. This includes situations where they receive transfer statements after the initial filing that indicate a security's covered/noncovered status was wrong or cost basis was incorrect. Corrections must be filed within 30 days of discovering certain errors.

When NOT to amend your return

When NOT to amend your return: The IRS notes that taxpayers typically don't need to amend returns for simple math errors—the IRS corrects these automatically. Also, if you forgot to attach a 1099-B but reported the income correctly on your return, an amendment usually isn't necessary.

Key Rules for 2025

Understanding the rules that govern Form 1099-B helps you verify the information you receive is correct and ensures proper tax reporting.

Covered vs. noncovered securities

Covered vs. noncovered securities: This distinction is crucial. "Covered securities" are those acquired after certain dates (generally after 2010 for stocks, 2011 for mutual funds and dividend reinvestment plans, and 2014 for certain debt instruments and options). For covered securities, brokers must report cost basis, acquisition dates, and holding periods. For "noncovered securities," brokers report proceeds but may leave basis information blank. You're responsible for tracking and reporting basis for noncovered securities.

Reporting thresholds

Reporting thresholds: Brokers must file Form 1099-B for each person for whom they've sold securities for cash, subject to certain exceptions. There's no minimum dollar threshold—even small transactions generally require reporting. However, there are exceptions for sales of fractional shares under $20 and certain exempt recipients like IRAs, corporations, and charitable organizations.

Short-term vs. long-term classification

Short-term vs. long-term classification: Box 2 of Form 1099-B indicates whether gains or losses are short-term (held one year or less) or long-term (held more than one year). This classification dramatically affects your tax rate—long-term capital gains receive preferential tax treatment with rates of 0%, 15%, or 20%, while short-term gains are taxed as ordinary income at your regular tax rate.

Wash sale adjustments

Wash sale adjustments: Box 1g reports "wash sale loss disallowed." A wash sale occurs when you sell a security at a loss and repurchase the same or substantially identical security within 30 days before or after the sale. The loss is disallowed for the current year, and the disallowed amount gets added to the cost basis of the replacement security. Brokers track and report this for covered securities within the same account, but you must track wash sales across different accounts or brokers yourself.

Backup withholding

Backup withholding: If you haven't provided a valid taxpayer identification number (TIN) or the IRS notifies your broker that you've underreported income, your broker may withhold 24% of proceeds as backup withholding. This appears in Box 4 and is credited toward your tax liability when you file your return.

Digital assets transition

Digital assets transition: For 2025, sales of digital assets that are also securities are generally reported on Form 1099-DA instead of Form 1099-B. However, there are three exceptions: tokenized securities on limited access regulated networks still use Form 1099-B, section 1256 contracts (like regulated futures on digital assets) are reported on Form 1099-B on an aggregate basis, and digital asset shares in money market funds aren't required to be reported.

Step-by-Step (High Level)

Here's how Form 1099-B flows from your investment activity to your completed tax return:

Step 1: Transaction occurs

Step 1: Transaction occurs – You sell securities through your brokerage account or exchange services through a barter network during 2025. This could be selling 50 shares of stock, closing a futures contract, or trading graphic design services for accounting services through a barter exchange.

Step 2: Broker records transaction

Step 2: Broker records transaction – Your broker tracks all details: date of sale, proceeds received, cost basis (for covered securities), acquisition date, and any adjustments like wash sale loss disallowances. They maintain this information throughout the year.

Step 3: Form 1099-B issued

Step 3: Form 1099-B issued – By February 17, 2026, your broker sends you Form 1099-B (or multiple forms if you had various types of transactions). Review it carefully against your own records. The form includes your identifying information, transaction descriptions, proceeds, cost basis, and relevant codes.

Step 4: Reconcile with your records

Step 4: Reconcile with your records – Compare the 1099-B information with your own transaction records. Verify sale dates, amounts, and basis information. Note any discrepancies immediately. Remember that your broker may not have complete information for noncovered securities—you'll need your original purchase records.

Step 5: Transfer to Form 8949

Step 5: Transfer to Form 8949 – Report each transaction from your 1099-B on Form 8949, Sales and Other Dispositions of Capital Assets. This form reconciles what your broker reported with what you're reporting, allowing you to make necessary adjustments. You'll need to check the appropriate box (A, B, D, E, or X) based on codes shown on your 1099-B.

Step 6: Summarize on Schedule D

Step 6: Summarize on Schedule D – Totals from Form 8949 transfer to Schedule D (Form 1040), where you calculate your overall capital gain or loss. Schedule D separates short-term and long-term transactions, applies the appropriate tax rates, and integrates with your main tax return.

Step 7: File your return

Step 7: File your return – Include Form 8949 and Schedule D with your Form 1040 when you file. The net capital gain or loss flows to your tax return and affects your total tax liability. Long-term gains benefit from preferential rates, while losses can offset gains and up to $3,000 of ordinary income.

Key procedural point

Key procedural point: The IRS receives copies of your Forms 1099-B electronically from brokers. Their systems match what brokers reported against what you report on your return. Discrepancies trigger notices, so accurate reporting and documentation are essential.

Common Mistakes and How to Avoid Them

Even experienced investors make errors when dealing with Form 1099-B. Here are the most frequent pitfalls and how to sidestep them:

Mistake #1: Failing to report all transactions

Mistake #1: Failing to report all transactions – Some taxpayers don't report sales because they resulted in losses or had minimal proceeds. Reality: You must report every transaction shown on Form 1099-B, even losses. The IRS receives the same information and expects to see matching entries on your return. Unreported transactions trigger automated notices. Solution: Account for every 1099-B transaction on Form 8949, even if some resulted in losses that benefit you.

Mistake #2: Incorrect cost basis for noncovered securities

Mistake #2: Incorrect cost basis for noncovered securities – When brokers don't report basis (noncovered securities), taxpayers sometimes leave it blank or guess. Reality: Without proper basis documentation, the IRS may assume your basis is zero, creating a larger gain and higher tax. Solution: Maintain detailed records of purchase dates, amounts, and any adjustments like reinvested dividends or stock splits. Use brokerage statements from purchase years to reconstruct basis if needed.

Mistake #3: Ignoring wash sale adjustments across accounts

Mistake #3: Ignoring wash sale adjustments across accounts – Brokers report wash sales within the same account, but they can't track wash sales across your multiple brokerage accounts or between taxable and retirement accounts. Reality: You're responsible for identifying and adjusting for wash sales across all your accounts. Solution: Review all your investment accounts for the 30-day period before and after any loss sales. Make manual adjustments on Form 8949 with code "W" when necessary.

Mistake #4: Not reconciling corrected forms

Mistake #4: Not reconciling corrected forms – If you file your return in February and receive a corrected 1099-B in March showing different proceeds or basis, some taxpayers ignore it hoping the IRS won't notice. Reality: The IRS will match the corrected form they received against your original filing, generating a notice. Solution: File Form 1040-X to amend your return when corrected forms materially change your tax liability.

Mistake #5: Confusing short-term and long-term holding periods

Mistake #5: Confusing short-term and long-term holding periods – The holding period for tax purposes is more than one year (not equal to one year). Stock purchased January 15, 2024, and sold January 15, 2025, is short-term, not long-term. Reality: The difference can mean a 20+ percentage point difference in tax rates. Solution: Count carefully—you must hold securities for more than 365 days for long-term treatment. Review Box 2 on Form 1099-B to verify your broker's classification is correct.

Mistake #6: Double-counting or omitting transactions when receiving multiple forms

Mistake #6: Double-counting or omitting transactions when receiving multiple forms – Complex portfolios may generate multiple 1099-Bs from one broker (covered/noncovered securities, different gain types) or forms from multiple brokers. Reality: Every transaction must appear once on your return—no more, no less. Solution: Create a spreadsheet listing every transaction from all forms before completing Form 8949. Cross-reference to ensure you don't duplicate or omit entries.

Mistake #7: Forgetting about barter exchange income

Mistake #7: Forgetting about barter exchange income – Barter exchanges report the fair market value of property or services exchanged in Box 13. Some taxpayers treat this as a non-cash transaction and don't report it. Reality: Barter transactions are taxable income. The fair market value of goods or services received is ordinary income, reported on Schedule C for business exchanges or Schedule 1 for personal exchanges. Solution: Report barter income appropriately based on whether the exchange was personal or business-related.

What Happens After You File

Understanding post-filing processes helps you respond appropriately if issues arise.

IRS matching program

IRS matching program: The IRS uses an automated document matching system that compares Forms 1099-B received from brokers against amounts reported on your tax return. This typically occurs 12-18 months after filing. If discrepancies are detected, you'll receive a CP2000 notice (Proposed Changes to Your Tax Return) explaining the mismatch and proposing additional tax, penalties, and interest.

If the IRS finds a discrepancy

If the IRS finds a discrepancy: Respond to IRS notices promptly—typically within 30 days. If the IRS is correct, pay the additional tax to minimize interest accumulation. If the IRS made an error (perhaps they didn't account for your correctly reported basis), provide documentation explaining the discrepancy. Include copies of your Form 8949, Schedule D, and supporting records like purchase confirmations.

Statute of limitations

Statute of limitations: Generally, the IRS has three years from your filing date to examine your return. However, if you omit more than 25% of gross income (which could include substantially understated proceeds), the statute extends to six years. For fraud or unfiled returns, there's no statute of limitations.

State tax implications

State tax implications: Most states with income taxes require reporting capital gains. Your state return typically mirrors your federal Schedule D, though some states treat capital gains differently (for example, some don't provide preferential rates). Your state may also receive Forms 1099-B from brokers, so ensure your state return matches.

Record retention

Record retention: Keep copies of all Forms 1099-B along with supporting documentation (purchase confirmations, adjustment records, transfer statements) for at least three years after filing, though seven years is safer for securities transactions. For noncovered securities, maintain purchase records indefinitely until you sell the securities and for at least three years after reporting the sale.

Audit considerations

Audit considerations: Capital gains and losses are common audit targets, especially for high-income taxpayers or complex transactions. Proper documentation—Forms 1099-B, Forms 8949, Schedule D, brokerage statements, and purchase records—is your best defense. The IRS is particularly attentive to basis reporting, so meticulous records for noncovered securities are essential.

FAQs

Q1: I sold stock but haven't received Form 1099-B yet. Can I file my tax return?

It's risky to file before receiving all Forms 1099-B. Brokers must send them by mid-February, so wait if possible. If you file early without complete information, you'll likely need to amend your return when forms arrive. If you need your refund urgently and have detailed brokerage records, you can file based on your records, but be prepared to amend if the 1099-B differs from your information.

Q2: My Form 1099-B shows a different cost basis than what I paid. What should I do?

First, review the transaction history. The basis on Form 1099-B may reflect adjustments for wash sales, return of capital distributions, or corporate reorganizations that you haven't accounted for. If you believe the broker is wrong, contact them to request a correction. If they won't correct it and you have documentation supporting your position, report your correct basis on Form 8949, using adjustment code "B" to explain the discrepancy in the adjustment column.

Q3: I received Forms 1099-B from multiple brokers. Do I need separate Forms 8949 for each broker?

No, you don't need separate Forms 8949 for each broker. Instead, organize your transactions by the type of gain/loss (short-term vs. long-term) and covered/noncovered status. You may need multiple Forms 8949 depending on these categories, but you can list transactions from all brokers together as long as they fit the same category and use the same basis reporting code (A, B, D, E, or X).

Q4: What if I sold stock I inherited? How does Form 1099-B handle that?

Inherited securities generally receive a "step-up" in basis to the fair market value on the decedent's date of death. If you inherited stock after 2010, it's a covered security, and your broker should report the stepped-up basis if they have documentation. However, you may need to provide your broker with a date-of-death valuation. The holding period for inherited securities is always long-term, regardless of how long you actually held them. Verify Box 2 shows "long-term" and Box 1e reflects the stepped-up basis.

Q5: I participated in a barter exchange and received Form 1099-B. Is this treated like capital gains?

Not necessarily. Barter exchange transactions appear in Box 13 of Form 1099-B and show the fair market value of goods or services you received. Unlike capital gains from securities, barter income is typically ordinary income. If you bartered as part of a business (exchanging professional services), report it on Schedule C as business income. If personal (trading personal property), it may go on Schedule 1 as other income. The classification depends on the nature of what you exchanged.

Q6: My 1099-B shows "noncovered security" with no cost basis. How do I find my original cost?

Check old brokerage statements from when you purchased the security—these often show purchase prices and dates. Also review confirmation statements sent after purchases, year-end tax statements, and dividend reinvestment records. If you've lost records and can't reconstruct basis, contact the company's investor relations department or transfer agent; they may have historical price information. As a last resort, you can research historical stock prices, though you'll need documentation of your actual purchase if audited.

Q7: I received a corrected Form 1099-B after filing. Do I have to amend my return?

If the correction changes your tax liability meaningfully (usually more than a few hundred dollars), you should file Form 1040-X to amend your return. Minor corrections that don't affect your tax owed may not require amendment. When in doubt, amend—the IRS will eventually match the corrected form they received against your return, and proactive amendment is better than an IRS notice. You can amend electronically for tax years 2019 and later, making the process relatively simple.

Sources

Sources: All information is derived from official IRS.gov resources, including Instructions for Form 1099-B (2025), About Form 1099-B, and General Instructions for Certain Information Returns.

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