Form 1099-B Tax Year 2012 Filing Checklist
Overview and Applicability
Form 1099-B for tax year 2012 continues the cost basis reporting framework established in 2011, with brokers reporting both gross proceeds and cost basis for covered securities. The form reflects wash sale loss disallowance reporting in Box 5 and noncovered security classification in Box 6, maintaining baseline cost basis reporting rules introduced the previous year. No stimulus reconciliation, Affordable Care Act shared responsibility provisions, Tax Cuts and Jobs Act changes, or special income exclusions apply to this form for the 2012 tax year.
Form Structure and Unique Characteristics
The 2012 Form 1099-B maintains the expanded box structure introduced in 2011 to accommodate mandatory basis reporting. The form distinguishes between covered securities, which require complete basis reporting, and non-covered securities, which may have limited information reported.
Brokers use Box 6 to identify noncovered securities, allowing them to omit certain details while still reporting the transaction. The form captures standard broker transactions, barter exchanges, corporate control changes, and regulated futures contracts within a single reporting structure.
Foreign Recipients and Withholding
Form 1099-B for 2012 does not apply to Economic Impact Payments, Affordable Care Act provisions, or energy credit programs. Foreign recipients face specific withholding requirements under Form 1042-S if the broker knows the recipient is a nonresident alien.
Publication 515 governs these withholding obligations, which supersede the standard backup withholding rules outlined in Form W-9. Brokers must determine the recipient's status and apply the appropriate withholding before completing Form 1099-B.
Ten-Step Compliance Checklist
Step 1: Verify Payer Identification and Form Assembly
Confirm that the payer’s federal identification number, complete name, address, and telephone number appear correctly at the top of the form. Verify the recipient’s identification number is accurate, noting that Copy B furnished to recipients may show only the last four digits for privacy protection, while Copy A filed with the IRS contains the complete taxpayer identification number.
Ensure that all three copies are properly printed and assembled according to the specifications outlined in the 2012 General Instructions for Certain Information Returns. Copy A goes to the IRS, Copy B to the recipient, and Copy C remains with the payer for record retention.
Step 2: Obtain and Reconcile Supporting Documentation
Gather comprehensive broker statements, account confirmations, and barter exchange records covering all transactions during calendar year 2012. If backup withholding applies and appears in Box 4, obtain Form W-9 documentation or evidence of the recipient’s failure to provide a valid taxpayer identification number. Collect wash sale loss notifications from the broker to reconcile amounts that will be reported in Box 5.
These notifications help recipients understand which losses are temporarily disallowed. They must be adjusted when preparing Schedule D. To facilitate accurate reporting, maintain organized files that separate covered securities from non-covered securities.
Step 3: Classify Securities and Mark Noncovered Security Status
Determine whether each security qualifies as covered or non-covered under the 2012 rules. Noncovered securities include securities other than stock, stock purchased before January 1, 2011, stock in regulated investment companies purchased before January 1, 2012, and stock purchased in or transferred to dividend reinvestment plans before January 1, 2012. Check Box 6 to indicate non-covered security status.
When Box 6 is checked, Boxes 1b, 3, 5, and 8 may remain blank because basis reporting requirements do not apply to noncovered securities. This checkbox provides penalty protection to brokers who choose not to report basis information for securities that are older than a specified period.
Step 4: Enter Transaction Date and Acquisition Date
Report the trade date of the sale or exchange in Box 1a. For short sales, enter the date the security was delivered to close the short sale position rather than the date the short position was opened. Enter the acquisition date in Box 1b for covered securities. Box 1b may remain blank if Box 6 is checked, indicating a non-covered security status, or if securities were acquired on various dates.
For aggregate reporting of regulated futures contracts shown in Boxes 10 through 13, leave Box 1a blank since these contracts receive mark-to-market treatment and do not have individual trade dates reported.
Step 5: Report Gross Proceeds and Specify Reporting Method
Enter the gross proceeds from broker transactions or barter exchanges in Box 2. Indicate through the checkboxes within Box 2 whether the amount reported to the IRS represents the sales price or the sales price less commissions, transfer taxes, and option premiums. Consistency with the broker’s books determines which approach to use.
The first checkbox indicates gross proceeds without reductions, while the second checkbox indicates proceeds reduced by transaction costs. This distinction affects how recipients calculate their gains or losses on Schedule D and Form 8949.
Step 6: Report Cost Basis and Wash Sale Disallowances
Enter the cost or other basis in Box 3 for covered securities. This amount generally includes the purchase price plus commissions and transfer taxes paid to acquire the security. Box 3 may remain blank if Box 6 is checked, indicating a non-covered security status. Report any wash sale loss disallowed under Internal Revenue Code Section 1091 in Box 5. Wash sales occur when a taxpayer sells securities at a loss and purchases substantially identical securities within 30 days before or after the sale.
The disallowed loss shown in Box 5 is nondeductible in the current year and instead increases the basis of the replacement securities. Recipients must not claim losses shown in Box 5 on Form 8949 or Schedule D without proper adjustment. Refer to Publication 550 for comprehensive wash sale rules and examples.
Step 7: Report Federal and State Tax Withholding
Enter backup withholding in Box 4 if the payer withheld federal income tax because the recipient failed to provide a valid Form W-9 or the IRS notified the payer of taxpayer identification number issues. The backup withholding rate for 2012 is 28 percent. Recipients must include this amount as tax withheld on their Form 1040.
If the recipient is a foreign person subject to Form 1042-S withholding, consult Publication 515 and Instructions for Form 1042-S for proper treatment. Foreign withholding operates separately from standard backup withholding and requires different forms and procedures. Enter state tax withheld in Box 16 and the state identification number in Box 17 if applicable.
Step 8: Report Barter Exchange Transactions and Descriptions
Enter the fair market value of cash, property, services, trade credits, or scrip received through barter exchanges in Box 14. Barter exchange income represents taxable ordinary income even when no cash changes hands. Enter a brief description of the transaction in Box 9. For securities, include the security symbol or CUSIP number. For regulated futures contracts, enter RFC or another appropriate designation. If reporting a corporate change in control or a substantial capital structure change, show the class of stock as C for common, P for preferred, or O for other. Keep descriptions concise but sufficiently detailed to allow recipients to identify specific transactions. Reference Publication 525 for comprehensive guidance on reporting bartering income.
Step 9: Report Regulated Futures and Forward Contracts
For regulated futures contracts and foreign currency contracts subject to Section 1256 treatment, complete Boxes 10 through 13. Enter the profit or loss realized on contracts closed during 2012 in Box 10. These represent contracts that were opened and closed within the calendar year or carried over from prior years and closed in 2012. Enter the year-end adjustment for contracts open as of December 31, 2011, in Box 11.
This adjustment reconciles the prior year mark-to-market with actual results. Enter unrealized profit or loss on contracts still open on December 31, 2012, in Box 12. These contracts are marked to market and treated as sold on the last business day of the year. Calculate the aggregate profit or loss in Box 13 by combining amounts from Boxes 10, 11, and 12. Recipients must report the Box 13 amount on Form 6781 to apply the special Section 1256 treatment of 60 percent long-term and 40 percent short-term gain or loss, regardless of actual holding period.
Step 10: Identify Type of Gain or Loss
Indicate in Box 8 whether any gain or loss is short-term or long-term based on the holding period. Securities held one year or less generate short-term capital gains or losses. Securities held more than one year produce long-term capital gains or losses. If Box 6 is checked, indicating a non-covered security status, Box 8 may remain blank; however, brokers should document the classification if it is determinable.
Box 15 serves as a separate checkbox indicating that loss is not allowed based on the amount reported in Box 2. This checkbox typically applies to certain corporate control changes or capital structure reorganizations where tax law prohibits the recognition of losses. Recipients must not report losses when Box 15 is checked.
Step 11: Sign, Date, and Furnish Copies
Date the form and ensure an authorized payer representative signs Copy C for record retention. Furnish Copy B to the recipient by February 15, 2013. This deadline applies to most broker transactions and represents a limited extension from the general January 31 due date for other information returns. File Copy A with the IRS by February 28, 2013, for paper filing or March 31, 2013, for electronic filing.
Consult the IRS Where to File page for Form 1099-B to determine the correct mailing address based on the payer’s location. Retain Copy C in payer records for at least three years from the filing date. Nonresident alien recipients subject to Form 1042-S reporting follow different procedures, with Form 1042-S replacing Form 1099-B for withholding and reporting purposes.
Key Updates for 2012
The 2012 Form 1099-B clarifies basis reporting requirements and noncovered security designations introduced the previous year. Box 8 now explicitly requires brokers to designate whether gains or losses are short-term or long-term for covered securities. While this information can be omitted for non-covered securities marked in Box 6, brokers benefit from documenting the classification when it is determinable.
The instructions emphasize that checking Box 6 provides penalty protection when brokers choose not to report acquisition dates, basis amounts, wash sale adjustments, and gain or loss classifications for older securities acquired before mandatory reporting began.
Form-Specific Limitations
Taxpayers must understand the distinction between information brokers that report to the IRS and information that taxpayers must independently track. Brokers report complete information for covered securities but may provide limited data for non-covered securities. Recipients remain responsible for maintaining accurate records of acquisition dates, purchase prices, and adjustments for all securities regardless of covered status. Wash sale rules apply to all securities, and taxpayers must identify and adjust for wash sales even when brokers do not report them in Box 5. The form captures transactions as they occur in broker accounts but does not reflect related transactions in other accounts or with other brokers that might create wash sales or affect gain or loss recognition.
This checklist provides comprehensive guidance for properly completing and reporting 2012 Form 1099-B transactions. Brokers must ensure the accurate reporting of covered securities while properly marking non-covered securities to avoid penalties. Recipients must understand the information provided and supplement it with their own records to prepare complete and accurate tax returns reporting all capital gains and losses for the year.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
