Form 1099-B Tax Year 2018 Recipient Checklist
Overview and Applicability
The 2018 Form 1099-B reflects the Tax Cuts and Jobs Act rules now in effect for capital gains and losses. No Economic Impact Payment reconciliation, Affordable Care Act shared responsibility provisions, unemployment exclusions, or year-specific charitable deductions apply to this form.
Capital gains and losses reported on Form 1099-B must be reconciled against Form 8949 and Schedule D under 2018 tax rates and netting rules. For 2018 recipients, the primary focus areas are basis reporting to the IRS, non-covered security designations, and Section 1256 contract treatment.
Ten-Step Compliance Checklist
Step 1: Gather and Verify Forms
Obtain Copy B from your broker by the February 15, 2019, deadline. Verify your complete taxpayer identification number is recorded with the issuer, noting that the form may show only the last four digits for privacy protection. Cross-reference the account number and CUSIP number against your broker statements to confirm all transactions are included.
If you received a corrected form, set aside the original and use only the copy marked “corrected” to ensure accurate reporting.
Step 2: Verify Transaction Description
Confirm Box 1a correctly describes your property, including stock shares, debt instruments, regulated futures contracts, Section 1256 options, forward contracts, or barter property.
For reportable corporate changes in control or capital structure, verify the stock class is identified as C for common, P for preferred, or O for other, and confirm the corporation name appears. For Section 1256 contracts, confirm that the description flags them appropriately.
For aggregate reporting in Boxes 10 through 13, no date should appear in Box 1c because these contracts receive mark-to-market treatment.
Step 3: Reconcile Transaction Dates
When Box 5 is not checked, verify that Box 1b shows the acquisition date. Box 1b may be blank only if Box 5 is checked, indicating non-covered securities, or if securities were acquired on multiple dates.
For short sales, Box 1b shows the date the security was delivered to close the short sale, and Box 1c shows the same delivery date. For regulated futures or Section 1256 option aggregate reporting, both boxes will be blank.
Confirm that the dates match your own records and broker statements to ensure proper allocation between short-term and long-term investments.
Step 4: Verify Proceeds and Basis Information
Box 1d shows cash proceeds reduced by commissions and transfer taxes, or aggregate fair market value from reportable corporate transfers. Box 1e shows the cost or other basis adjusted for option premiums when applicable.
For securities acquired through the exercise of non-compensatory options granted or acquired on or after January 1, 2014, a basis adjustment for option premiums is mandatory. For options granted or acquired before January 1, 2014, basis adjustment remains permissive.
Box 1f may contain codes indicating special circumstances. Box 1g identifies amounts for wash sale losses that cannot be deducted. Consult Publication 550 and Form 8949 instructions if any field is blank unexpectedly or differs from your records, and report discrepancies to your broker promptly.
Step 5: Confirm Gain and Loss Classification
Box 2 must show one classification: short-term gain or loss, long-term gain or loss, or ordinary income. For covered securities with Box 5 unchecked, the broker reports the basis to the IRS in Box 1e and indicates the holding period in Box 2.
You may be able to report certain transactions directly on Schedule D without Form 8949 if no adjustments are required, though most taxpayers must complete Form 8949.
When Box 5 is checked, indicating noncovered securities, Box 2 may be blank. If blank, you must determine the holding period yourself using your purchase records and the acquisition and sale dates.
Step 6: Account for Withholding and Loss Limitations
Include any amount shown in Box 4 as federal income tax withheld on your 2018 tax return. Backup withholding occurs when you fail to provide a valid taxpayer identification number or when the IRS notifies the broker of identification problems.
Review Box 15 carefully. When Box 15 is checked, you cannot deduct a loss based on the gross proceeds shown in Box 1d for reportable changes in control or capital structure. Your broker should provide a separate statement explaining the corporate action and any allowable loss or gain treatment.
Do not attempt to report a loss on the gross proceeds amount when Box 15 is checked.
Step 7: Identify Noncovered Securities
Check Box 5 to determine whether securities are covered or non-covered. When Box 5 is checked, the securities are noncovered and generally include stock purchased before 2011, mutual fund shares purchased before 2012, dividend reinvestment plan stock 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, 1g, and Box 2 may be blank. You must obtain or reconstruct the basis from your own records and determine the holding period yourself. You must still report these transactions on Form 8949 and Schedule D using your independently determined basis and holding period information.
Step 8: Process Section 1256 Contracts
Review Boxes 10 through 13 if your form reports Section 1256 contracts, including regulated futures contracts, foreign currency contracts, or Section 1256 options.
Box 10 shows realized profit or loss on contracts closed during 2018. Box 11 displays the year-end adjustment for contracts that were open as of December 31, 2017, reconciling the prior year’s mark-to-market treatment with actual results. Box 12 shows unrealized profit or loss on contracts still open as of December 31, 2018, which are marked to market and treated as closed for tax purposes.
Box 13 displays the aggregate profit or loss, calculated by combining the results from Boxes 10, 11, and 12. Report the Box 13 aggregate amount on Form 6781, not on Form 8949 or Schedule D. These contracts receive special tax treatment with 60 percent classified as long-term and 40 percent as short-term, regardless of actual holding period.
Step 9: Report Collectibles and Bartering Income
Review Box 1f for codes indicating special transaction types. Code C in Box 1f indicates collectibles subject to special gain treatment with a maximum 28 percent tax rate. Refer to Form 8949 and Schedule D instructions for proper handling of collectibles.
Check Box 14 for bartering income. When Box 14 contains an amount, you received cash, property, services, or trade credits from a barter exchange. Include the fair market value reported in Box 14 as gross income on your 2018 return.
Consult Publication 525 for comprehensive barter income treatment guidance. Bartering amounts represent ordinary income unless otherwise classified.
Step 10: Complete Required Forms and File
Attach Form 8949 and Schedule D to your 2018 Form 1040, Form 1040-SR, Form 1040-NR, or applicable return type. For Section 1256 contracts, attach Form 6781 in addition to Schedule D.
Report all Box 1d proceeds according to the applicable check box on Form 8949 indicated on your Form 1099-B. Part I of Form 8949 reports short-term transactions using checkboxes A, B, or C. Part II reports long-term transactions using checkboxes D, E, or F.
For each transaction, enter the description from Box 1a, acquisition date from Box 1b or your records, sale date from Box 1c, proceeds from Box 1d, cost basis from Box 1e or your records, and any adjustments from Boxes 1f or 1g.
Retain Copy B of Form 1099-B with your tax records for at least three years. Review Boxes 16, 17, and 18 for state tax information. If state income tax was withheld as shown in Box 16, file Copy 2 with your state return as required. Date and sign your return, then file it according to the IRS instructions for your filing status and location.
Important Form Details
Basis Reporting Requirements
For covered securities with Box 5 unchecked, brokers must report the basis to the IRS in Box 1e. The basis amount includes purchase price plus commissions and transfer taxes. 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 include the option premium as a mandatory requirement.
For non-compensatory options granted or acquired before January 1, 2014, brokers may, but are not required to, adjust the basis for option premiums. Compensatory options do not include option-related amounts in basis adjustment because those amounts are already reported as compensation on Form W-2.
Proceeds Reporting Methods
Brokers report proceeds in Box 1d either as gross proceeds or as proceeds reduced by commissions, transfer taxes, and option premiums. Checkboxes within Box 1d indicate which method the broker used. Understanding the reporting method helps you calculate gain or loss accurately.
When proceeds are reported net of costs, do not separately deduct those costs when calculating your taxable gain or loss. Consistency between broker reporting and your tax return calculations helps prevent discrepancies that may trigger IRS inquiries.
Holding Period Classification
Box 2 indicates whether any gain or loss is short-term or long-term. Securities held one year or less generate short-term capital gain or loss taxed at ordinary income rates. Securities held for more than one year generate long-term capital gains or losses, which are eligible for preferential tax rates under the Tax Cuts and Jobs Act.
For covered securities, brokers determine the holding period from the acquisition date in Box 1b to the sale date in Box 1c. For non-covered securities with Box 5 checked, Box 2 may be blank, and you must determine the holding period from your personal records.
Wash Sale Adjustments
Box 1g shows wash sale loss disallowance amounts for losses that cannot be claimed on your 2018 return. Wash sales occur when you sell securities at a loss and purchase substantially identical securities within 30 days before or after the sale. The disallowed loss shown in Box 1g must be added to the basis of the replacement securities.
Brokers identify wash sales occurring within a single account but cannot track wash sales across multiple accounts or different brokerage firms. You must review all your trading activity to identify any additional wash sales and make the necessary adjustments when preparing your return.
Code Identification
Box 1f contains codes indicating special transaction types or adjustments. Code W indicates wash sale loss disallowance. Code C indicates collectibles subject to a maximum tax rate of 28 percent. Code D indicates that market discount treatment may apply.
When codes appear in Box 1f, consult the Form 8949 and Schedule D instructions along with Publication 550 for proper handling of each coded transaction type.
Form-Specific Limitations
Noncovered Securities Requirements
When Box 5 is checked, the broker does not report basis, and Boxes 1e, 1f, 1g, and Box 2 will typically be blank. You cannot rely on the Form 1099-B to determine gain or loss. You must use your own records to establish cost basis and holding period.
Maintain comprehensive documentation, including purchase confirmations, statements showing acquisition dates, amounts paid, and all corporate action adjustments. Failure to provide adequate basis documentation may result in IRS adjustments if the transaction is audited.
Corporate Action Loss Restrictions
When Box 15 is checked, loss disallowance applies to reportable changes in control or capital structure. You cannot deduct a loss calculated from the gross proceeds in Box 1d alone. Your broker will provide separate documentation explaining the allowable loss or gain treatment.
Follow that guidance and Form 8949 instructions for proper reporting on Schedule D. These restrictions typically apply to certain corporate reorganizations where tax law prohibits loss recognition despite an apparent economic loss.
This checklist offers detailed help for correctly reporting 2018 Form 1099-B transactions according to the Tax Cuts and Jobs Act rules, making sure you follow IRS guidelines and handle capital gains, losses, and derivative contracts properly.
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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.
