What Form 8949 Is For

Form 8949 is the IRS form used to report sales and exchanges of capital assets—essentially, property you own for personal use or investment purposes. Capital assets include stocks, bonds, mutual funds, real estate (like your home or rental property), and even personal items like jewelry or vehicles in certain situations.

For the 2011 tax year, Form 8949 was brand new. The IRS introduced it to replace the old Schedule D-1 and to create a more detailed reporting system for capital gains and losses. Think of Form 8949 as the detailed transaction worksheet, while Schedule D (which still exists) became the summary page. If you sold any investments, real estate, or other capital assets in 2011, you likely needed to complete Form 8949 first, then carry the totals over to Schedule D, which you attach to your main tax return (Form 1040).

The form helps you—and the IRS—keep track of what you bought, what you sold it for, and whether you made or lost money on the transaction. It also reconciles the information your broker or financial institution reported to the IRS (on Form 1099-B) with what you're claiming on your tax return. IRS.gov

When You’d Use Form 8949 (Including Late or Amended Returns)

You must use Form 8949 for the 2011 tax year if you:

• Sold or exchanged stocks, bonds, mutual funds, or other securities
• Sold real estate (unless specifically reported on another form like Form 4684 for casualty losses)
• Had capital gain distributions from mutual funds that you need to report in detail
• Experienced involuntary conversions of capital assets (other than casualty or theft)
• Had nonbusiness bad debts
• Received a Form 1099-B or Form 1099-S from a broker or real estate transaction

For late or amended returns: If you're filing your 2011 tax return late or need to amend it (using Form 1040X), you still must include Form 8949 with all the required transaction details. The normal deadline for 2011 returns was April 17, 2012, but you can file late returns at any time—you'll just face penalties and interest if you owed taxes. For amended returns, you generally have three years from the original filing deadline to file Form 1040X. If you need to make an election (like opting out of installment sale reporting), you may have up to six months after the original due date (excluding extensions) to file an amended return with the notation "Filed pursuant to section 301.9100-2." IRS.gov

Key Rules or Details for 2011

Mandatory Use and Structure

1. Form 8949 is mandatory for most transactions. Nearly all sales and exchanges that previously went directly on Schedule D or Schedule D-1 must now be reported on Form 8949 first. You complete Form 8949 before filling out Schedule D. IRS.gov
2. Separate reporting by transaction type. You must complete a separate Form 8949 page for each of these categories:
   • Box A: Transactions reported on Form 1099-B with cost basis reported to the IRS
   • Box B: Transactions reported on Form 1099-B without cost basis reported to the IRS
   • Box C: Transactions for which you did not receive a Form 1099-B
     This applies separately to short-term transactions (Part I) and long-term transactions (Part II). IRS.gov
3. Line-by-line detail required. Unlike previous years, you cannot enter summary totals or write "available upon request." Each transaction needs its own line showing description, dates acquired and sold, sales proceeds, cost basis, and any adjustments. IRS.gov
4. Adjustment codes matter. Column (b) requires specific codes (like "W" for wash sales, "L" for nondeductible losses, "H" for home sale exclusions) when adjustments apply, and column (g) shows the dollar adjustment amount.
5. Holding period determines classification. Property held one year or less generates short-term gains or losses; property held more than one year produces long-term gains or losses. Inherited property is automatically treated as long-term. IRS.gov

Step-by-Step (High Level)

Preparation

Step 1: Gather your documents

Collect all Forms 1099-B and 1099-S from brokers and real estate transactions, plus your own records showing purchase dates, costs, and selling expenses.

Step 2: Separate transactions

Sort your sales into short-term (held ≤1 year) and long-term (held >1 year). Then further divide them based on Box A, B, or C categories.

Completing the Form

Step 3: Complete the form

For each transaction, enter:

• Column (a): Description of property (e.g., "100 shares XYZ Corp")
• Column (b): Adjustment code if needed (W, L, H, S, O, etc.)
• Column (c): Date acquired (MM/DD/YYYY)
• Column (d): Date sold (MM/DD/YYYY)
• Column (e): Sales proceeds (from Form 1099-B or your records)
• Column (f): Cost or other basis (what you paid, plus improvements or commissions)
• Column (g): Adjustment amount (positive or negative)
• Column (h): Gain or loss (column e minus column f, adjusted by column g)

Step 4: Total each page

Add up columns (e), (g), and (h) for each Form 8949 page.

Step 5: Transfer to Schedule D

Carry the totals from all your Form 8949 pages to the appropriate lines on Schedule D (lines 1, 2, 3, 8, 9, or 10).

Step 6: Complete Schedule D

Follow Schedule D instructions to calculate your overall capital gain or loss and determine your tax. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Not using Form 8949 at all

Many taxpayers tried to report transactions directly on Schedule D as they had in previous years. For 2011, this was incorrect—Form 8949 is required.
Solution: Always complete Form 8949 first for any capital asset sales.

Mistake #2: Checking the wrong box

Mixing transactions that should be separated into different categories.
Solution: Carefully review each Form 1099-B to see if basis was reported to the IRS, then check the correct box (A, B, or C) at the top of each Form 8949 page.

Mistake #3: Using summary reporting

Writing "See attached" or "Available upon request" instead of listing each transaction.
Solution: Enter each transaction on its own line with all required details. While you can attach broker statements, they must be in a format similar to Form 8949 with all columns of information.

Mistake #4: Ignoring wash sale adjustments

Wash sales occur when you sell stock at a loss and buy substantially identical stock within 30 days before or after the sale. The loss is not deductible.
Solution: Check box 5 on Form 1099-B for wash sale losses. Enter "W" in column (b) and the disallowed loss amount (as a positive number) in column (g). IRS.gov

Mistake #5: Wrong cost basis

Using the wrong purchase price, forgetting to include commissions, or not adjusting for stock splits.
Solution: Keep detailed records from when you purchased the asset. Include purchase price plus buying commissions, and adjust for stock splits or return of capital distributions. Contact your broker if you're missing information.

Mistake #6: Mixing short-term and long-term transactions

Putting both on the same form page.
Solution: Use Part I (page 1) only for short-term transactions and Part II (page 2) only for long-term transactions. Remember: inherited property is always long-term.

Mistake #7: Not reporting personal-use property sales

Thinking you don't need to report the sale of your home or personal items if you received a Form 1099-S.
Solution: Report these transactions even if the loss is nondeductible. Use code "L" in column (b) and enter the loss as a positive adjustment in column (g).

Mistake #8: Missing election deadlines

Certain elections, like opting out of installment sale treatment, have strict deadlines.
Solution: File Form 8949 showing the full gain on a timely return (including extensions). For some elections, an amended return filed within six months may still work. IRS.gov

What Happens After You File

IRS Matching and Tax Effects

• IRS matching: The IRS compares the information on your Form 8949 with the Forms 1099-B and 1099-S that brokers and others sent them. This is why accurate reporting is crucial—mismatches trigger IRS letters and potential audits. IRS.gov
• Tax calculation: Your capital gains and losses affect your tax bill. Short-term capital gains are taxed at ordinary income rates (10% to 35% in 2011). Long-term capital gains are taxed at preferential rates (0%, 15%, or in some cases 25% or 28%). Capital losses can offset capital gains dollar-for-dollar, and you can deduct up to $3,000 ($1,500 if married filing separately) of excess losses against ordinary income. IRS.gov
• Loss carryforwards: If your capital losses exceed your capital gains plus the $3,000 deduction limit, you carry the excess loss forward to future tax years indefinitely until used up.
• Potential audit triggers: Large losses, unusual transactions, significant discrepancies between Form 1099-B and your reported amounts, or missing Forms 8949 when the IRS knows you had transactions can trigger correspondence or audits.
• Refunds or payments: Your capital gain or loss calculation feeds into your overall tax liability. Net capital gains may increase your tax owed, while losses may increase your refund or reduce what you owe.

FAQs

Q1: Do I really need Form 8949 if I only sold a few shares of stock?

Yes. For 2011, Form 8949 is required for virtually all capital asset sales, even one share of stock. The only narrow exceptions are certain transactions that go directly on Schedule D (like capital gain distributions that don't require detailed reporting). IRS.gov

Q2: What if my broker didn't send me a Form 1099-B?

You still must report the sale. Check Box C at the top of Form 8949 and fill in all the information based on your own records. Keep documentation in case of an audit. IRS.gov

Q3: Can I attach my broker's statement instead of completing Form 8949?

Only if the statement contains all the information required by Form 8949 in a similar format (description, dates acquired and sold, proceeds, basis, adjustments, and gain/loss for each transaction). You still need to check the appropriate box on Form 8949 and include the summary totals. IRS.gov

Q4: What's the difference between Box A, Box B, and Box C?

• Box A: Your broker reported the sale to the IRS and also reported your cost basis (typically for securities purchased in 2011)
• Box B: Your broker reported the sale but not the cost basis (common for older securities)
• Box C: No Form 1099-B was issued (private sales, some real estate, etc.)
  Checking the right box helps the IRS match your return to broker reports. IRS.gov

Q5: How do I report the sale of my home?

If you can exclude all your gain under the home sale exclusion rules (up to $250,000 for single filers, $500,000 for married filing jointly), and you didn't receive Form 1099-S, you don't need to report it. If you received Form 1099-S or can't exclude all the gain, report the sale on Form 8949 with Box C checked. Enter "H" in column (b) and show the excluded gain as a negative number in column (g). IRS.gov

Q6: What if I sold an asset I inherited?

Inherited property is always considered long-term, regardless of how long you actually held it. Report it on Part II of Form 8949 (long-term transactions). Your basis is generally the fair market value on the date of the decedent's death. IRS.gov

Q7: I made a mistake on my Form 8949. Now what?

File an amended return using Form 1040X. Attach a corrected Form 8949 and Schedule D showing the correct information. Explain the changes in Part III of Form 1040X. The IRS may assess additional tax, penalties, and interest if the correction results in higher tax owed, but correcting errors voluntarily is always better than waiting for the IRS to find them.

For more information: Visit IRS.gov/form8949 or consult IRS Publication 550 (Investment Income and Expenses) and Publication 544 (Sales and Other Dispositions of Assets) available at IRS.gov.