What Form 1099-B (2015) Is For
Form 1099-B (2015) provides information that helps you report the sale of stock, mutual funds, exchange-traded funds, and other capital assets. Brokers use the form to show the sale date, purchase price, and net gain for each transaction. The form facilitates transparent reporting for tax purposes and helps you organize the necessary details for your tax return.
The form also includes the original cost and adjusted cost basis for each security. These entries reflect factors such as reinvested dividends, substantially identical stock, and similar security activity, all of which are governed by tax law. The information helps you report accurate figures and maintain compliance with required tax forms.
When You’d Use Form 1099-B (2015)
Taxpayers use Form 1099-B when they need to report cost basis and capital gains for the calendar year. The form supports reporting for non-covered shares, same-account activity, and transactions that create a long-term capital gain. Many filers rely on a tax professional to address cases where the wash sale rule applies or when reporting income across different regulations.
The form also guides you through the calculation of results for each sale and the preparation of information for your tax return. Your entries help document gains or losses that apply to your investment activity for the year. A tax advisor can help you complete the form accurately when requirements become complex.
Key Rules or Details for 2015
The 2015 reporting rules distinguish between covered securities and non-covered securities for tax purposes. Covered securities include items that require brokers to report cost basis, while non-covered securities leave the taxpayer responsible for accurate entries. Taxpayers must account for disallowed losses when substantially identical transactions occur within restricted periods.
The rules address nondeductible loss when the wash sale rule applies across related purchases. These rules require the careful application of cost basis methods, such as the FIFO method, the average cost method, or the average cost basis approach. Each technique can influence future capital gains for the taxpayer.
Additional requirements apply to stock splits, new stock, and inherited holdings after the original owner’s death. These events can determine the per-share cost basis and influence the final reporting outcome. Taxpayers benefit from reviewing these factors before preparing their tax forms.
Step-by-Step (High Level)
Taxpayers follow a precise sequence of actions when they prepare Form 8949 and Schedule D for the current tax year. The process begins with information that includes the CUSIP number, purchase date, and sale date for each transaction. These details support calculating the cost basis and the adjusted cost basis for reporting income.
- A taxpayer gathers all Form 1099-Bs and confirms that each figure matches the records.
- A taxpayer enters each sale on Form 8949 and selects the correct cost basis method for each transaction.
- A taxpayer uses calculating cost basis tools to verify the gain or loss for each transaction.
- A taxpayer transfers totals to Schedule D and ensures that each amount supports a capital gain entry.
- A taxpayer reviews current tax year rules to certify accurate and proper reporting across all financial accounts.
Common Mistakes and How to Avoid Them
Many taxpayers make errors when reporting wash sales involving substantially identical stock or when recording similar security purchases during the same filing period. Several issues appear when filers track reinvested dividends or calculate the holding period without reviewing brokerage statements. Many mistakes also occur when taxpayers enter the wrong purchase price or select an inaccurate cost basis method after a stock split.
- Incorrect Wash Sale Reporting: Taxpayers must confirm whether the wash sale rule applies before reporting wash sales.
- Holding Period Miscalculations: Filers verify the holding period through detailed transaction lists to prevent mistakes.
- Similar Security Confusion: Taxpayers identify each similar security with clear transaction notes to reduce risk.
- Purchase Price Errors: Filers compare each purchase price with brokerage confirmations to ensure accuracy.
- Cost Basis Method Issues: Taxpayers should confirm the cost basis method before calculating gains or losses to avoid potential issues.
Taxpayers can improve their results by reviewing each figure with patience and maintaining organized records. Careful preparation strengthens the accuracy of every entry. Reliable information supports smoother reporting for the
What Happens After You File
The Internal Revenue Service compares information from brokers to the entries on your tax return. The agency reviews the reporting of income details and evaluates whether your reported cost basis aligns with the figures provided by each brokerage. Any difference triggers further review to confirm the accuracy of your filing.
Taxpayers may receive notices when transactions involving more shares, other investments, or changing market conditions do not match recorded entries. These notices outline concerns regarding the reporting of income or cost basis differences across accounts. A tax advisor can help you correct figures and resolve issues that appear during the review process.
FAQs
How do I calculate my adjusted cost basis for my income tax return?
You calculate your adjusted cost basis by starting with the original purchase price and adding items such as reinvested dividends or fees. This calculation helps you report a capital gain or loss accurately for the current tax year. A tax advisor can guide you when multiple cost basis methods affect your figures.
What happens if I sell and repurchase the same security at a lower price?
A sale and repurchase of the same security at a lower price can affect your capital gains if the transaction falls under the wash sale rules. You may need to adjust the basis and delay your claim for the loss. A professional can offer tax advice when the timing affects your reporting.
Which cost basis method should I use for my investment strategy?
Many taxpayers use methods such as average cost, FIFO, or specific identification when calculating cost basis for their investment strategy. Each cost basis method yields different results, depending on the share price and timing. Your brokerage can provide an example that illustrates how each technique affects future tax outcomes.
How does a change in share price affect the capital gains I must pay?
A lower price at purchase or a higher sale value affects the capital gains amount you report. These changes influence the rate you may pay when you complete your income tax filing. Taxpayers can review each CUSIP number entry to confirm the accuracy of the figures.
What should I do if transaction details do not match my records?
Contact your brokerage when details, such as the sale date or CUSIP number, appear incorrect. The broker can provide corrected information, allowing you to claim the correct figures on your return. Accurate records enable you to follow the correct cost basis methods for precise reporting.
