Form 8949: Sales and Other Dispositions of Capital Assets (2021)

What the Form Is For

Form 8949 is where you report the details of every capital asset you sold, exchanged, or otherwise disposed of during the year. “Capital assets” basically means investments and valuable property you own, such as:

• Stocks, bonds, mutual funds
• Cryptocurrency
• Real estate (other than your main home in many cases)
• Collectibles like artwork, rare coins, or precious metals IRS

Before 2011, you listed these line-by-line on Schedule D-1. Form 8949 replaced that continuation sheet and now acts as the transaction log that feeds totals into Schedule D (Capital Gains and Losses), where your overall gain or loss is calculated. IRS+1

The form is split into:

• Part I – Short-term transactions
  Assets held one year or less (taxed at ordinary income rates).
• Part II – Long-term transactions
  Assets held more than one year (typically taxed at lower, long-term capital gains rates). IRS

Brokers and others send the IRS copies of your Forms 1099-B, 1099-S, etc. Form 8949 is how the IRS checks that what you reported matches what they received.

When You’d Use It (Original, Late, or Amended Returns)

You use Form 8949 for any return—original, late, or amended—that reports sales of capital assets:

• Original return for 2021
  Attach Form 8949 to your Form 1040/1040-SR along with Schedule D if you had capital gain or loss transactions.
• Late filing
  If you’re filing a 2021 return late, you still attach Form 8949 just as you would have on-time. The IRS doesn’t relax the reporting requirements just because you’re late.
• Amended return (Form 1040-X)
  You’ll need a corrected Form 8949 if:
  • You get an additional or corrected Form 1099-B/1099-S
  • You realize you reported the wrong basis, dates, or proceeds
  • You discover you qualify for an exclusion or adjustment you didn’t claim previously

For amendments, you prepare a complete, corrected Form 8949—don’t just show the difference. The new form replaces the old one in the IRS’s eyes. IRS

Key Rules You Need to Know

1. When Form 8949 Is Required

You generally must use Form 8949 to report virtually all capital asset sales, unless the instructions specifically say you can report them directly on Schedule D (for example, some broker-reported transactions with basis reported and no adjustments). IRS

Certain transactions go on other forms instead, like:

• Installment sales – Form 6252
• Like-kind exchanges – Form 8824
• Some main home sales that are fully excludable (no gain to report)

2. Short-Term vs. Long-Term

Your holding period determines whether the transaction is short-term or long-term:

• Short-term: held one year or less
• Long-term: held more than one year

Count from the day after you acquired the asset through the day you sold it. If you held it exactly one year, it’s short-term, not long-term. IRS

3. Checkboxes A/B/C and D/E/F

At the top of Parts I and II you’ll see checkboxes that tell the IRS how each group of transactions was reported to them:

• Part I (short-term):
  • Box A – 1099-B issued, basis reported to IRS, no adjustments
  • Box B – 1099-B issued, basis not reported to IRS
  • Box C – No 1099-B received
• Part II (long-term):
  • Box D – 1099-B issued, basis reported to IRS, no adjustments
  • Box E – 1099-B issued, basis not reported
  • Box F – No 1099-B

Each box requires its own page(s) of Form 8949. IRS

4. Basis & Matching with 1099-B

Your cost basis generally includes:

• Purchase price
• Commissions/fees
• Certain adjustments (e.g., return of capital, reinvested dividends, stock splits)

For many newer securities, brokers must report basis to the IRS, but for older holdings and some other property, you are responsible for tracking and proving basis. IRS+1

The IRS matches your Form 8949 to the 1099-B information. If your numbers don’t reconcile and you don’t explain why using the adjustment columns, expect a notice.

5. Wash Sales

If you sell stock at a loss and buy substantially identical stock within 30 days before or after the sale, your loss is generally disallowed (a “wash sale”). The disallowed loss is added to the basis of the new shares instead. IRS+1

Brokers identify many wash sales on 1099-B, but they only see what happens in their own account. If you trade the same security across multiple brokers, you must apply the wash sale rules correctly.

Step-by-Step Overview (High Level)

Step 1 – Gather Your Documents

Collect:

• All Forms 1099-B, 1099-S (and any crypto platform tax reports)
• Purchase confirmations and prior statements showing:
  • When you acquired each asset
  • What you paid (including commissions/fees)
  • Any adjustments (reinvested dividends, splits, return of capital, etc.)

Include cryptocurrency—the IRS treats it as property, so gains and losses belong on Form 8949. IRS

Step 2 – Sort Into Categories

Separate transactions into:

1. Short-term vs. long-term, then
2. For each group, by 1099-B status:
   • Basis reported with no changes (A/D)
   • Basis not reported (B/E)
   • No 1099-B (C/F)

Each combination gets its own section and check box on Form 8949. IRS

Step 3 – Fill Out Form 8949

For each transaction, complete a line with:

• Column (a): Description of property (e.g., “100 sh. XYZ Corp”)
• Column (b): Date acquired
• Column (c): Date sold
• Column (d): Proceeds (sales price)
• Column (e): Cost or other basis
• Column (f): Adjustment code(s) (if needed)
• Column (g): Adjustment amount (+/–)

Repeat for every sale. Use additional pages as needed.

Step 4 – Total Each Page

At the bottom of each page:

• Total columns (d), (e), and (g)
• These subtotals will feed into the appropriate lines on Schedule D (short-term in Part I, long-term in Part II). IRS

Step 5 – Transfer Totals to Schedule D

On Schedule D, you:

• Combine the subtotals from each Form 8949 section
• Net gains and losses
• Apply the $3,000 loss limit (or $1,500 if married filing separately) against other income
• Carry any remaining capital loss forward to future years

Schedule D then flows into your Form 1040, impacting your total tax.

Common Mistakes and How to Avoid Them

1. Forgetting Transactions

People often forget to report:

• Small stock sales
• Crypto trades
• Closed mutual fund positions

The IRS still gets 1099-B/1099-S information, so omission = mismatch. Solution: match your own list to every 1099-B and platform statement before filing.

2. Misclassifying Holding Period

Treating a short-term gain as long-term, or vice versa, means wrong tax rates. Remember:

• Held 365 days or less → short-term
• Held more than 365 days → long-term

Count carefully using actual dates.

3. Wrong Cost Basis

Common basis errors:

• Ignoring commissions/fees
• Forgetting reinvested dividends (which increase basis)
• Failing to adjust for splits/mergers/return of capital

Bad basis = wrong gain/loss. Use your full history of statements, not just the most recent one.

4. Missing Adjustment Codes

If you change numbers from what’s on 1099-B (for example, to fix basis or for wash sales), you must:

• Enter a code in column (f)
• Put the adjustment amount in column (g)

Without codes, the IRS doesn’t know why your numbers differ from the broker’s.

5. Crypto Oversights

Taxpayers commonly:

• Ignore P2P trades or transfers between wallets that actually include sales
• Forget small sales used to buy goods/services
• Don’t track basis across multiple exchanges

Every taxable crypto disposition needs its own line on Form 8949.

6. Not Matching 1099-B Totals

Your totals on Form 8949/Schedule D should reconcile to your 1099-B totals, adjusted only by properly coded differences. If the IRS can’t match them, you may get a CP2000 “underreporter” notice.

What Happens After You File

Once you file Form 8949 with your return:

1. IRS matching:
   The IRS computer systems match your reported transactions to all Forms 1099-B/1099-S filed under your SSN. IRS+1
2. If everything matches:
   Your return processes normally. Schedule D figures are included in your total tax calculation, and you receive your refund or pay your balance due like any other return.
3. If there are mismatches:
   You may receive a CP2000 notice, proposing additional tax based on unreported or mis-reported transactions. You can:
   • Agree and pay, or
   • Dispute and send documentation (broker statements, your own records, etc.)
4. Tax effect:
   • Short-term gains are taxed at your ordinary income rate
   • Long-term gains generally get preferential rates (0%, 15%, or 20%, depending on your income)
   • Net capital losses can offset gains and then up to $3,000 of other income, with the rest carried forward
5. Recordkeeping & future years:
   Keep all records (Forms 8949, Schedule D, broker statements) at least three years—longer if you have carryover losses or complex transactions. Future returns will use your capital loss carryover computed from this year. IRS

Frequently Asked Questions

Do I need Form 8949 if I only had a few stock sales and my broker sent a 1099-B?

Yes, in most cases. Even if your broker reported everything to the IRS, you still generally must report those transactions on Form 8949 or Schedule D using the rules in the instructions. Only some simple, basis-reported, no-adjustment transactions can bypass Form 8949 and go directly on Schedule D, and the criteria are narrow. IRS

What if I sold cryptocurrency on several exchanges?

Each crypto disposition (sale, trade, or use to buy something) needs a line on Form 8949. That means you must:

• Consolidate data from all exchanges and wallets
• Track basis for each lot (often using FIFO or another permitted method)
• Report proceeds, basis, and gain/loss for each transaction

Crypto tax software can help aggregate and format this for Form 8949. IRS

Can I just report my net gain or loss without listing every trade?

Generally no. The IRS requires transaction-by-transaction reporting except for some very specific exceptions explained in the instructions. Most individual investors must list each sale separately on Form 8949.

What if I forgot to report a 2021 stock sale?

File an amended return (Form 1040-X) with:

• A corrected Form 8949 including the missing sale
• An updated Schedule D

Amending voluntarily is usually cheaper and cleaner than waiting for the IRS to send you a notice with added tax, interest, and possible penalties.

How do I report inherited stock that I sold?

Inherited property generally gets a stepped-up basis equal to its fair market value on the date of death (unless special estate rules apply). When you sell:

• Report the sale on Form 8949, Part II (long-term)
• Use “”INHERITED“” in the description (column (a))
• Use the date of death or “various” per the instructions and enter the stepped-up basis in column (e)

Because inherited property is usually treated as long-term, it qualifies for long-term capital gains rates even if you sell it soon after inheriting. IRS

If I had gains and losses during the year, do they cancel out?

They net against each other, but with rules:

1. Net short-term gains/losses
2. Net long-term gains/losses
3. Then net the short-term and long-term results together

If you end up with a net loss overall, you can deduct up to $3,000 against ordinary income in 2021 ($1,500 if married filing separately), and carry the rest forward.

Do I need to report the sale of my main home on Form 8949?

Often no, if:

• You owned and lived in the home as your main residence for at least 2 of the 5 years before the sale, and
• Your gain is ≤ $250,000 (single) or ≤ $500,000 (married filing jointly)

In that case, you can usually exclude all the gain and don’t have to report the sale. If you don’t fully qualify for the exclusion, the gain exceeds the limit, or you received Form 1099-S, you may need to report the sale on Form 8949 and Schedule D using the special exclusion codes in the instructions. IRS+1

Sources:
Core rules and descriptions are based on official IRS guidance, including About Form 8949 and related instructions, and the Schedule D/8949 instructions (current versions, but the core mechanics also applied to the 2021 tax year). IRS+2IRS+2

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