Form 8949 is the IRS form that taxpayers use to report the sale or exchange of capital assets—essentially, when you sell investments or property for a profit or loss. Think of it as the detailed transaction record that explains to the IRS exactly what you bought, when you bought it, what you sold it for, and how much you gained or lost.

Capital assets include stocks, bonds, mutual funds, real estate (in certain cases), cryptocurrency, and other investments. The form serves as a bridge between what your broker reports to you (and the IRS) on Form 1099-B and what ultimately appears on your tax return's Schedule D. According to the IRS instructions for Form 8949, the form allows you and the IRS to reconcile amounts reported on Forms 1099-B or 1099-S with the amounts you report on your return.

The form is divided into two main parts: Part I for short-term transactions (assets held one year or less) and Part II for long-term transactions (assets held more than one year). This distinction matters significantly because short-term capital gains are taxed at your ordinary income tax rate, while long-term gains receive preferential tax treatment with lower rates.

For 2019, individuals, corporations, partnerships, estates, and trusts all used Form 8949 to report these transactions. The form also handled special situations like nonbusiness bad debts, worthlessness of securities, and beginning in 2019, the new reporting requirements for Qualified Opportunity Fund (QOF) investments.

What the Form Is For

Form 8949 is the IRS form that taxpayers use to report the sale or exchange of capital assets—essentially, when you sell investments or property for a profit or loss. Think of it as the detailed transaction record that explains to the IRS exactly what you bought, when you bought it, what you sold it for, and how much you gained or lost.

Capital assets include stocks, bonds, mutual funds, real estate (in certain cases), cryptocurrency, and other investments. The form serves as a bridge between what your broker reports to you (and the IRS) on Form 1099-B and what ultimately appears on your tax return's Schedule D. According to the IRS instructions for Form 8949, the form allows you and the IRS to reconcile amounts reported on Forms 1099-B or 1099-S with the amounts you report on your return.

The form is divided into two main parts: Part I for short-term transactions (assets held one year or less) and Part II for long-term transactions (assets held more than one year). This distinction matters significantly because short-term capital gains are taxed at your ordinary income tax rate, while long-term gains receive preferential tax treatment with lower rates.

For 2019, individuals, corporations, partnerships, estates, and trusts all used Form 8949 to report these transactions. The form also handled special situations like nonbusiness bad debts, worthlessness of securities, and beginning in 2019, the new reporting requirements for Qualified Opportunity Fund (QOF) investments.

When You’d Use It (Including Late and Amended Returns)

Initial Filing

You must file Form 8949 with your 2019 tax return (Form 1040, 1040-SR, or applicable business return) if you sold or exchanged capital assets during the year. This applies whether you made a profit, took a loss, or broke even. The form was due by the original tax deadline—April 15, 2020 (extended to July 15, 2020 due to COVID-19).

Late Filing

If you missed the 2019 filing deadline entirely, you can still file a late return. The IRS offers a filing window, though consequences vary. For 2019 returns, the IRS extended the refund claim deadline to July 17, 2023 due to pandemic-related postponements. After this window closes, you lose the opportunity to claim any refund you might be entitled to, though you should still file if you owe taxes to minimize penalties and interest.

Amended Returns

If you discover errors on your originally filed Form 8949—perhaps you forgot to report some stock sales, used incorrect cost basis information, or didn't properly account for adjustments—you need to file an amended return using Form 1040-X. According to IRS guidelines, you generally have three years from the date you filed your original return or two years from the date you paid the tax (whichever is later) to file an amended return and claim a refund.

Common reasons for amending a 2019 return with corrected Form 8949 information include: receiving corrected 1099-B forms from brokers after filing, discovering unreported transactions, identifying incorrect cost basis calculations, or finding wash sale adjustments that weren't properly reported.

Key Rules and Requirements for 2019

Reporting Requirements

Every capital asset transaction must generally be reported on a separate row of Form 8949, with specific details including the description of property, dates acquired and sold, proceeds (sales price), cost basis, and any adjustments. However, the 2019 instructions provided two important exceptions that allowed summary reporting under certain conditions.

The 1099-B Connection

If you received Form 1099-B from your broker, you must check one of three boxes at the top of each Part (A, B, or C for short-term; D, E, or F for long-term) to indicate whether the cost basis was reported to the IRS:

• Box A/D: Transactions where basis was reported to the IRS
• Box B/E: Transactions where basis was not reported to the IRS
• Box C/F: Transactions without a 1099-B form

This distinction matters because if all your transactions had basis reported to the IRS (Box A or D) and required no adjustments, you could skip Form 8949 entirely and report summary totals directly on Schedule D—a significant time-saver for many investors.

Short-Term vs. Long-Term

The holding period determines which part of the form to use and, ultimately, your tax rate. Count from the day after you acquired the property through the disposal date. One crucial exception: inherited property is always reported as long-term, regardless of how long you actually held it.

Special 2019 Considerations

The 2019 tax year introduced new reporting requirements for Qualified Opportunity Fund investments, requiring taxpayers to report both deferred gains invested in QOFs and dispositions of QOF interests on Form 8949. Additionally, the 60% exclusion for qualified gains on empowerment zone business stock was no longer available for dispositions after 2018.

Adjustment Codes

Column (f) on Form 8949 requires specific codes to explain adjustments in column (g). Common codes include “W” for wash sale loss disallowances, “B” for incorrect basis on 1099-B forms, and “E” for expenses not reflected on the broker's statement. Understanding these codes is essential for proper reporting.

Step-by-Step (High Level)

How to Complete Form 8949 (High Level)

Step 1: Gather Your Documents

Collect all Forms 1099-B and 1099-S from brokers, real estate transactions, and any records of sales without 1099 forms. Organize them by short-term versus long-term, and by whether basis was reported to the IRS.

Step 2: Determine Your Reporting Strategy

Decide if you qualify for Exception 1 (allowing you to skip Form 8949 for certain transactions with basis reported to the IRS) or Exception 2 (allowing attached statements instead of individual line-by-line reporting). Most taxpayers will need to complete the full form.

Step 3: Complete Part I (Short-Term Transactions)

For each short-term transaction (held one year or less):

• Check the appropriate box (A, B, or C) at the top
• Enter each transaction on a separate row with:
  (a) Description of property (e.g., “100 shares XYZ Corp”)
  (b) Date acquired
  (c) Date sold
  (d) Proceeds (sales price from 1099-B)
  (e) Cost basis
  (f) Adjustment code(s) if needed
  (g) Adjustment amount (positive or negative)
  (h) Gain or loss (calculated automatically as d - e + g)

Use additional copies of Part I if you need to check different boxes for different categories of transactions.

Step 4: Complete Part II (Long-Term Transactions)

Follow the same process as Part I, but for assets held more than one year, using boxes D, E, or F as appropriate.

Step 5: Total Each Part

Sum columns (d), (e), (g), and (h) at the bottom of each completed Part I and Part II.

Step 6: Transfer Totals to Schedule D

The subtotals from all your Form 8949 pages flow to Schedule D (Form 1040), where the IRS calculates your overall capital gain or loss. Schedule D then determines how much you owe in capital gains taxes or how much capital loss you can deduct (limited to $3,000 per year against ordinary income, with excess carried forward).

Step 7: Attach to Your Return

Include all completed copies of Form 8949 when you file your tax return, either electronically or by mail.

Common Mistakes and How to Avoid Them

Mistake 1: Incorrectly Reporting Wash Sales

A wash sale occurs when you sell a security at a loss and buy the same or substantially identical security within 30 days before or after the sale. The loss is disallowed and must be added to the basis of the replacement security. Many taxpayers fail to properly adjust for wash sales reported in box 1g of Form 1099-B.
Solution: Check your 1099-B forms carefully for wash sale amounts and use code “W” in column (f) with the appropriate adjustment in column (g).

Mistake 2: Using Incorrect Cost Basis

This is perhaps the most common error. Cost basis should include not just the purchase price but also commissions, fees, reinvested dividends (for mutual funds), and adjustments for stock splits.
Solution: Keep meticulous records of all investment transactions, including non-cash events like reinvested dividends and stock splits. If your 1099-B shows incorrect basis, enter the correct amount in column (e) and explain with code “B” in column (f).

Mistake 3: Mixing Short-Term and Long-Term Transactions

Putting long-term transactions on Part I or vice versa throws off your tax calculations and may result in paying more tax than necessary.
Solution: Double-check holding periods before categorizing transactions. Count carefully from the day after acquisition through the sale date.

Mistake 4: Forgetting to Report Transactions Without 1099-B

Not all capital asset sales generate a 1099-B. Sales of real estate (reported on 1099-S), private company stock, cryptocurrency (in many 2019 cases), and other assets still require Form 8949 reporting.
Solution: Review your entire investment portfolio for all dispositions during the year, not just those with 1099 forms.

Mistake 5: Failing to Report All Required Adjustments

Many situations require adjustments: selling expenses not included in proceeds, non-deductible wash sale losses, incorrect basis amounts, and more. Failing to make necessary adjustments can trigger IRS notices.
Solution: Review the comprehensive list of adjustment codes in the 2019 instructions and carefully consider whether any apply to your transactions.

Mistake 6: Not Keeping the 1099-B and Form 8949 Aligned

The IRS computers match what brokers report on 1099-B forms with what you report. Mismatches trigger automated notices.
Solution: Always start with the proceeds amount shown on your 1099-B in column (d), even if you think it's wrong, and use adjustments to correct it.

What Happens After You File

Immediate Processing

Once you file your return with Form 8949 and Schedule D attached, the IRS begins processing. The agency's computers automatically match the proceeds amounts on your Form 8949 against the 1099-B forms that brokers filed. If everything matches, processing continues smoothly.

If Discrepancies Are Found

When the IRS finds mismatches between your reported amounts and broker-reported amounts, you'll typically receive a CP2000 notice—a proposal to change your tax return. This isn't technically an audit, but rather an automated matching program. You have the right to respond, providing documentation to support your reporting. Many discrepancies arise from legitimate adjustments that you properly reported but the computer didn't recognize.

Tax Calculation

The totals from Form 8949 flow to Schedule D, where short-term and long-term gains are calculated separately. Short-term gains are taxed at your ordinary income tax rates (10% to 37% for 2019). Long-term gains receive preferential rates: 0%, 15%, or 20% depending on your taxable income level. Some high-income taxpayers also pay the 3.8% Net Investment Income Tax on their capital gains.

Capital Loss Treatment

If your total capital losses exceed your capital gains, you can deduct up to $3,000 of net capital loss against other income (like wages) for 2019. Any excess loss carries forward to future years indefinitely, retaining its character as short-term or long-term.

Refunds or Additional Tax Due

If your capital gains increase your tax liability beyond what you paid through withholding and estimated taxes, you'll owe additional tax (plus potential penalties and interest for underpayment). If you had capital losses or already paid sufficient tax, you may receive a refund.

Record Retention

The IRS recommends keeping tax records for at least three years from the filing date, but for capital asset transactions, it's wise to keep records much longer—potentially until three years after you sell the asset, especially for real estate and other long-term holdings where you need to track basis adjustments over many years.

FAQs

Q1: Do I need Form 8949 if my broker sent me a 1099-B?

Yes, in most cases. Form 1099-B reports your transactions to the IRS, but Form 8949 is where you report them on your tax return and reconcile any differences. However, if all your 1099-B forms show that basis was reported to the IRS (box 3 checked), and you don't need to make any adjustments, you can skip Form 8949 and report summary totals directly on Schedule D under Exception 1. This exception saves time but applies only in specific circumstances.

Q2: What if my cost basis on the 1099-B is wrong or missing?

This is common, especially for older shares, inherited stock, or shares transferred between brokers. If your 1099-B shows incorrect basis (or no basis), you should enter the correct basis in column (e) of Form 8949. If the 1099-B showed basis that was reported to the IRS but it's wrong, use code “B” in column (f) and enter the adjustment amount in column (g) to reconcile the difference. You're responsible for proving the correct basis, so maintain good records including purchase confirmations, inheritance documents, and corporate action records.

Q3: Can I use average cost basis for mutual funds and other investments on Form 8949?

Yes, mutual fund shareholders can elect to use average cost basis for shares, which simplifies tracking when you've bought shares at different prices over time. If you've made this election, your broker should report transactions using the average basis method. However, you can only use this method for mutual funds and some other regulated investment companies, and once you've made the election for a particular fund, you can't change it. For 2019, if you used average basis, this should be reflected in your 1099-B, and you should report it consistently on Form 8949.

Q4: What happens if I sold cryptocurrency in 2019—do I report it on Form 8949?

Yes, absolutely. The IRS treats cryptocurrency (Bitcoin, Ethereum, etc.) as property, not currency. When you sell, exchange, or spend cryptocurrency, it creates a capital gains or loss event that must be reported on Form 8949. For 2019, most cryptocurrency exchanges didn't issue 1099-B forms, so you'd typically report these transactions in Part I or Part II with box C or F checked (no 1099-B received). You're responsible for tracking your cost basis for each cryptocurrency purchase and calculating gains/losses for each disposal. This area saw increased IRS scrutiny beginning in 2019.

Q5: How do I report inherited stock on Form 8949?

Inherited stock receives a “step-up” in basis to the fair market value on the date of death (or alternate valuation date if elected by the estate). Report these sales on Part II (long-term) regardless of how long you actually held the stock, and enter “INHERITED” in column (b) where the acquisition date would normally go. For 2019, if you received Schedule A to Form 8971 from an estate executor, you must use a basis consistent with the value reported on that form. The stepped-up basis rule generally means little or no taxable gain if you sell inherited assets relatively soon after inheriting them.

Q6: What if I forgot to report some stock sales on my original 2019 return?

You need to file an amended return using Form 1040-X. Prepare a corrected Form 8949 including all transactions (both those previously reported and those you missed), then complete Schedule D with the corrected totals. File Form 1040-X explaining the changes and attach the corrected forms. If the unreported sales result in additional tax owed, file and pay as soon as possible to minimize penalties and interest. The IRS may have already received 1099-B forms for the missed transactions and could send you a notice, but filing an amended return proactively is always better.

Q7: Do I have to report every single stock trade separately if I'm an active trader with hundreds of transactions?

Generally, yes—each transaction requires a separate line on Form 8949. However, there are limited exceptions. Exception 2 allows you to attach a statement with all required details instead of completing numerous Form 8949 copies, as long as you provide the same information in a similar format. Additionally, certain corporations, partnerships, and securities dealers meeting specific criteria can report summary totals. For most individual investors, tax software handles the volume automatically by importing transactions and generating the necessary forms. Without software, hundreds of transactions mean hundreds of lines across multiple Form 8949 pages.

Resources and Citations

This summary is based on official IRS guidance from:

• IRS Form 8949 (2019 version)
• 2019 Instructions for Form 8949
• About Form 8949, Sales and other Dispositions of Capital Assets
• 2019 Instructions for Schedule D
• IRS Topic No. 409, Capital Gains and Losses
• File an Amended Return

For questions specific to your situation, consult a tax professional or visit IRS.gov for additional publications including Publication 550 (Investment Income and Expenses) and Publication 551 (Basis of Assets).

Note: This summary provides general guidance for the 2019 tax year. Tax laws change frequently, and individual circumstances vary. Always consult current IRS publications and consider professional tax advice for your specific situation.