Form 1099-B Tax Year 2014 Filing Checklist
Overview and Context
Form 1099-B for tax year 2014 expands mandatory basis reporting to include debt instruments acquired on or after January 1, 2014, options granted or acquired on or after January 1, 2014, and securities futures contracts entered into on or after January 1, 2014. Stock has been subject to basis reporting since 2011.
The form requires brokers to adjust the basis for option premiums when non-compensatory options were granted or acquired on or after January 1, 2014. No stimulus reconciliation, Affordable Care Act shared responsibility provisions, Tax Cuts and Jobs Act changes, or year-specific tax credits apply to this form.
Form, Purpose, and Limitations
Form 1099-B reports progress and basis information from brokers and barter exchanges. The form provides the necessary data for recipients to complete Schedule D and Form 8949, but it does not allow them to claim credits or deductions directly. Non-U.S. residents receiving proceeds subject to federal withholding may require the broker to file Form 1042-S instead of or in addition to Form 1099-B. Recipients cannot claim losses on reportable changes in control or capital structure when Box 15 is checked, and brokers must separately advise of any such losses.
Key Form Changes for 2014
Expanded Basis Reporting
Box 1e now reports the cost or other basis for all covered securities. This includes stock acquired after December 31, 2010, certain mutual fund shares acquired after December 31, 2011, debt instruments acquired after December 31, 2013, options granted or acquired after December 31, 2013, and securities futures contracts entered into after December 31, 2013. For securities acquired through the exercise of non-compensatory options granted or acquired on or after January 1, 2014, brokers must adjust the basis to reflect the option premium.
For non-compensatory options granted or acquired before January 1, 2014, brokers may, but are not required to, adjust the basis of the options. The compensation option is not adjusted for amounts reported on Form W-2.
Noncovered Security Classification
Box 5 indicates a non-covered security status when checked. Noncovered securities generally include stock purchased before 2011, most mutual fund stock purchased before 2012, stock in dividend reinvestment plans purchased before 2012, debt acquired before 2014, options granted or acquired before 2014, and securities futures contracts entered into before 2014.
When Box 5 is checked, boxes 1b, 1e, 1f, and 1g may be blank, and recipients must determine their basis and holding period from personal records.
Ten-Step Compliance Checklist
Step 1: Identify Transaction Type
Determine whether the form reports stock, debt, commodities, futures contracts, option contracts, barter transactions, or reportable changes in control or capital structure. Each transaction type requires specific treatment on Form 8949 and Schedule D. Noncovered securities with Box 5 checked may have a blank basis in Box 1e. Covered securities must show a basis in Box 1e, according to the 2014 reporting requirements.
Step 2: Verify Identification Information
Confirm your taxpayer identification number matches your records. The form displays only the last four digits for privacy protection, although the complete number is included on Copy A, which is filed with the IRS. Verify the payer’s federal identification number, CUSIP number if shown, and any account number or unique identifier match your brokerage statements. Accurate identification prevents misreporting and ensures correct matching with IRS records.
Step 3: Review Basis Reporting and Option Adjustments
Check whether the security is covered or non-covered by examining Box 5. For covered securities, verify that Box 1e shows the correct basis. If you exercised a non-compensatory option granted or acquired on or after January 1, 2014, confirm your broker adjusted the basis in Box 1e to include your option premium. For non-compensatory options granted or acquired before January 1, 2014, or for compensatory options, determine whether any basis adjustment was made and consult Publication 550 for proper treatment of unadjusted elements.
Step 4: Classify as Covered or Noncovered
Examine Box 5 to determine security classification. When Box 5 is checked, the security is not covered, and boxes 1b, 1e, 1f, and 1g may be left blank. You must determine and report your basis and holding period using personal records. When Box 5 is not checked, the security is covered, and the broker has reported basis and holding period information to the IRS. Covered securities include stock acquired after 2010, certain mutual fund shares acquired after 2011, debt acquired after 2013, options granted or acquired after 2013, and securities futures contracts entered into after 2013.
Step 5: Determine Gain or Loss Character
Verify that Box 2 correctly indicates whether the transaction generates short-term or long-term gain or loss. For covered securities, the holding period runs from the acquisition date shown in Box 1b to the sale date shown in Box 1a. Securities held one year or less produce short-term results, while investments held more than one year produce long-term results.
For noncovered securities with Box 5 checked, independently verify the holding period using your records and consider wash sale rules and other statutory provisions referenced in Publication 550 and Schedule D instructions.
Step 6: Identify Special Adjustments
Review Box 1f for the amount of accrued market discount, if applicable. Check for any codes or notations indicating wash sales, collectibles treatment, or market discount adjustments. Wash sale codes indicate nondeductible losses under Internal Revenue Code Section 1091 that must be added to the basis of replacement securities. Collectible codes indicate preferential capital gain treatment under Internal Revenue Code Section 1(h).
Market discount codes indicate accrued amounts that may be deferred or included in income. Consult Schedule D instructions and Publication 550 for proper treatment of each adjustment type.
Step 7: Locate Form 8949 Reporting Category
Identify the applicable checkbox on Form 8949 as indicated on the Form 1099-B. This designation indicates where the transaction should be reported on your 2014 tax return. Short-term transactions appear in Part I of Form 8949, while long-term transactions appear in Part II. Use the specific checkbox reference provided to correctly place each transaction and ensure proper carry-forward to Schedule D. Do not report transactions in any other location or category.
Step 8: Handle Corporate Control Changes
For transactions involving reportable changes in control or capital structure, verify whether you recognize gain from receiving cash, stock, or other property exchanged for corporate stock. The description is located in Box 8, and the aggregate amount is listed in Box 1d. When Box 15 is checked, you cannot claim a loss based on the gross proceeds reported in Box 1d.
The broker must separately advise of any losses from these transactions. Report recognized gains or permitted losses on Form 8949 and Schedule D according to the instructions for corporate reorganizations.
Step 9: Report Section 1256 Contracts
Review boxes 10 through 13 for regulated futures contracts, foreign currency contracts, and Section 1256 option contracts. Box 10 shows profit or loss on contracts closed during 2014. Box 11 displays the adjustment for open contracts as of December 31, 2013. Box 12 shows unrealized profit or loss on contracts that were still open as of December 31, 2014. Box 13 aggregates these amounts to show total profit or loss.
Report the Box 13 amount on Form 6781 for special Section 1256 treatment with 60 percent long-term and 40 percent short-term classification regardless of actual holding period. Do not report these transactions on Form 8949 or Schedule D.
Step 10: Report Withholding and Barter Income
Check Box 4 for federal income tax withheld through backup withholding. Include any amount shown as tax paid on your 2014 Form 1040. Backup withholding occurs when you fail to provide a valid taxpayer identification number or when the IRS notifies the broker of identification issues. Review Box 14 for barter exchange income representing the cash, fair market value of property, services, or trade credits you received.
Report barter income as ordinary income on the appropriate schedule, generally Schedule C for self-employment activities or Form 1040 for other income. Barter income is taxable even when you receive no cash.
Filing Requirements and Deadlines
Attach a copy of Form 1099-B to your 2014 Form 1040 when filing by mail. Keep copies with your records when filing electronically. Do not file Form 1099-B directly with the IRS because the broker will file Copy A by February 28, 2015, for paper submissions or by March 31, 2015, for electronic submissions.
If you receive a corrected Form 1099-B with the corrected box checked, use the corrected information and retain both the original and corrected copies with your tax records. Consult the IRS “Where to File” page for state filing requirements and information on state copies, if applicable, as some states require them.
Special Considerations
Recipients of corrected forms must amend previously filed returns if the corrections affect reported amounts. Maintain all Forms 1099-B with supporting documentation for at least three years after filing your return. Compare forms received against your brokerage statements to identify any missing or duplicate reporting.
Contact your broker immediately to resolve discrepancies before filing your return. Understanding the distinction between covered and non-covered securities helps you prepare accurate returns and maintain proper documentation for securities that the broker does not fully report.
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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.
