What Form 1099-B (2017) Is For
Form 1099-B (2017) reports broker transactions involving securities sold, mutual funds, forward contracts, and other property. The form supports calculations that identify short-term gains, long-term capital gains, capital losses, and taxable gains. These details help you understand net capital loss outcomes for your income tax return preparation.
Brokers report the trade date, security delivered, gross proceeds, fair market value, and property received on the IRS form. They also include information about whether the asset was held for more than a year on each separate statement. You match entries to your taxpayer identification number, adoption taxpayer identification number, or individual taxpayer identification number for accuracy.
When You’d Use Form 1099-B (2017)
Taxpayers receive Form 1099-B during the calendar year after they sell stock, redeem mutual funds, or close positions in regulated futures contracts. The form arrives when broker transactions generate reportable activity that influences personal finance decisions and yearly filing responsibilities. You use the information to understand how each sale affects your overall tax return.
Married filing jointly, married filing separately, and married filing taxpayers may rely on the form differently based on their capital structure and financial goals. Brokers may include entries involving backup withholding, tax withheld, corporation’s stock, foreign corporation activity, and each separate statement. You use these details to determine net capital gains, short-term gain, long-term gain, and the best time to offset gains with losses.
Key Rules or Details for 2017
Covered and noncovered securities follow different rules for the 2017 filing, and each covered security carries specific basis reporting requirements. Brokers identify a non-covered security when they cannot report basis details for a sale held more than a year. These distinctions guide how you classify short-term outcomes, long-term capital gains, and any capital loss.
Brokers report box D entries, box B entries, aggregate amount figures, and same-year sales information. They also document option premiums, precious metals activity, debt obligations, and transactions related to dividend reinvestment plans. These details reflect investments purchased across varying holding periods and support calculations of ordinary income.
The Internal Revenue Service uses reported data to match tax return entries. Brokers must report proceeds, classify gains, and identify wash-sale issues when a taxpayer repurchases the same security within a specified period. These steps help you prepare for the next section that explains the overall filing process.
Step-by-Step (High Level)
You can follow a structured process to organize Form 1099-B information for your income tax return. Each step helps you manage broker transactions with clarity, reducing confusion as you prepare details for filing. This approach supports accurate reporting for capital gains taxes and related entries.
- Step 1: Gather one form from each broker, as this action includes all broker transactions in your review.
- Step 2: You verify your taxpayer identification number, social security number, income tax return entries, and trade date information. This verification confirms that each detail is accurate.
- Step 3: You separate covered securities from non-covered securities, which correctly classifies each sale.
- Step 4: You confirm the cost basis using fair market value, a brief description, and any necessary adjustments. This confirmation ensures accurate reporting for option premiums or dividend reinvestment plan activity.
- Step 5: Identify short-term capital gains, long-term capital gains, backup withholding entries, and tax withheld amounts, as this preparation prepares the data for transfer to IRS schedules.
Common Mistakes and How to Avoid Them
Many taxpayers encounter difficulties when reporting broker transactions on Form 1099-B. These errors often involve capital assets, fair market value entries, or overlooked capital losses, which can affect filing accuracy. You can reduce these problems by reviewing each detail carefully and confirming all values before preparing your income tax return.
- Capital Asset Classification: Taxpayers often incorrectly classify capital assets. A careful review of each sale’s short-term or long-term rules helps prevent this error.
- Fair Market Value Reporting: Taxpayers often enter incorrect fair market value amounts, and verified pricing from broker statements corrects these entries.
- Basis Accuracy: Taxpayers often miscalculate the basis for forward contracts. Comparing cost data with brief description entries and broker confirmations corrects these calculations.
- Wash-Sale Matching: Taxpayers often miss wash-sale adjustments for the same security. Review of separate statement notes for restricted periods helps identify these adjustments.
- Filing Status Impact: Taxpayers misapply rules for married filing jointly or married filing separately, and careful application of Internal Revenue Service instructions corrects these filing status errors.
If you are experiencing business tax problems, consider reaching out to a tax professional for assistance.
What Happens After You File
The Internal Revenue Service reviews broker transactions to confirm capital gains, taxable income, and taxable gains reported on your tax return. The agency compares long-term capital gains, net capital gain amounts, and offset gains entries to broker data for accuracy. You maintain stronger records when you review each figure before filing.
The Internal Revenue Service may send clarification notices when reported numbers differ from broker records. Late or corrected data for a non-covered security, corporation’s stock, or foreign corporation activity may change your reported amounts during this process. You stay prepared for the FAQs when you understand how these reviews affect your return.
FAQs
What does Form 1099-B report?
Form 1099-B reports broker transactions that help you determine capital gains taxes and long-term capital gains. The form lists gross proceeds, cost basis, and details needed to recognize gain on your Schedule D. Brokers use uniform security identification procedures to match each covered security to your records.
How do I handle missing or incorrect cost basis information?
You verify cost basis by reviewing broker statements and checking whether a sale involves a covered security. You update entries when the reported amount appears significantly lower than your documentation. You use accurate cost basis figures to calculate capital gains and apply the correct tax rate on your Schedule D.
When do wash-sale rules apply to a short sale or replacement purchase?
Wash-sale rules apply when you sell or close a position through short sales and purchase the same security within a restricted period. These rules prevent an immediate deduction for the loss until you adjust the basis of the replacement shares. You confirm wash-sale entries on the IRS form before completing your Schedule D.
How do I report long-term capital gains and short-term gains?
You report long-term capital gains and short-term outcomes on your Schedule D based on the holding period listed on your Form 1099-B. You recognize gain by comparing the cost basis to gross proceeds and applying the correct tax rate. You keep each category separate to maintain accurate capital gains reporting.
How does backup withholding affect my return?
Backup withholding appears on your IRS form when a payer withholds federal tax from broker transactions. You record this amount as federal income tax withheld on your return, which may reduce the amount you owe. You confirm the withholding amount before you pay capital gains taxes or submit your Schedule D.
For more resources on prior-year IRS forms, visit Get Tax Relief Now | IRS & State Tax Help Experts.
