Form 1099-B Tax Year 2020 Filing Checklist
Overview and Context
Form 1099-B for tax year 2020 requires brokers and barter exchanges to report proceeds and basis information for securities transactions. The form uses specific checkboxes to indicate whether securities are noncovered, generally including stock purchased before 2011, mutual fund shares purchased before 2012, transfers from dividend reinvestment plans before 2012, debt acquired before 2014, and options granted or acquired before 2014. When securities are covered, brokers report the basis to the IRS, which directly affects the Schedule D reporting methods for recipients.
Year-Specific Applicability
No stimulus reconciliation, Affordable Care Act penalties, or year-specific above-the-line charitable deductions apply to Form 1099-B recipients in 2020. The form continues the post-Tax Cuts and Jobs Act framework for basis reporting and non-covered security designation established in prior years. The reporting structure remains consistent with the comprehensive basis reporting requirements that brokers must follow for covered securities.
Ten-Step Compliance Checklist
Step 1: Verify Payer Identification
Confirm that the payer’s complete name, address, and taxpayer identification number are accurately reported. The 2020 instructions require complete payer identification to match IRS records. Your recipient identification number appears in full on Copy A filed with the IRS, though Copy B furnished to you may show only the last four digits for privacy protection. Verify this information matches your broker account records to ensure proper transaction matching.
Step 2: Identify Transaction Type
Determine whether the reported transaction involves stocks, debt instruments, regulated futures contracts, Section 1256 option contracts, foreign currency contracts, or barter exchange proceeds. Review the applicable checkbox on the Form 8949 field, which indicates whether the transaction is reported in the short-term gain or loss section, the long-term gain or loss section, or requires special treatment. The 2020 instructions require you to verify that this checkbox matches your actual holding period and transaction characteristics.
Step 3: Check Noncovered Security Status
Examine Box 5 to determine covered or noncovered status. When Box 5 is checked, the security is non-covered and typically includes stock purchased before 2011, mutual fund stock purchased before 2012, transfers from dividend reinvestment plans before 2012, debt acquired before 2014, options granted or acquired before 2014, or securities futures contracts entered into before 2014.
When Box 5 is checked, Box 1b, 1e, 1f, 1g, and Box 2 may be blank. You must obtain it from your own records and report on Form 8949 without relying on the payer’s reported basis. Maintain comprehensive purchase documentation, including confirmation statements, monthly account statements, and records of all corporate actions that affect the basis.
Step 4: Review Basis Reporting
For covered securities with Box 5 unchecked, verify that Box 1e shows the cost or other basis the broker reported to the IRS. The basis amount generally 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.
Review whether Box 2 indicates short-term or long-term classification. The Schedule D instructions identify specific situations where you may report certain transactions directly on Schedule D without completing Form 8949, though most taxpayers must use Form 8949 for detailed transaction reporting.
Step 5: Report Proceeds and Commissions
Note that Box 1d shows cash proceeds reduced by commissions or transfer taxes related to the sale. Brokers may report gross proceeds or net proceeds depending on their record-keeping methods, with checkboxes indicating which approach was used. The 2020 form does not separately add back commissions that have already been deducted from proceeds.
Reconcile this amount with your brokerage statement to ensure accuracy before entering on Form 8949. For losses on forward contracts or non-Section 1256 option contracts, amounts appear in parentheses, indicating negative values.
Step 6: Account for Wash Sale Disallowance
Review Box 1g for wash sale adjustments. When Box 1g contains a nondeductible loss amount, the 2020 instructions confirm this reflects a wash sale adjustment under Internal Revenue Code Section 1091. You cannot deduct this loss on your 2020 return because you purchased substantially identical securities within 30 days before or after the sale.
The disallowed loss increases the basis of the replacement security. Reference Publication 550 to verify whether a wash sale disallowance applies to your transaction and understand how to adjust the basis for replacement securities.
Step 7: Handle Collectibles and Qualified Opportunity Funds
Examine Box 1f for code C, indicating collectibles including art, antiques, stamps, coins, and precious metals. For collectibles, gains may be subject to the 28 percent capital gain rate under the 2020 tax law. Review Box 8 for the Qualified Opportunity Fund checkbox. For Qualified Opportunity Fund proceeds, refer to the Instructions for Form 8949 and Publication 550 to determine deferral and exclusion eligibility under the Qualified Opportunity Zone program.
These transactions require special notation and treatment on Form 8949 and Schedule D.
Step 8: Report Section 1256 Contracts
Review boxes 10 through 13 if your form reports regulated futures contracts, foreign currency contracts, or Section 1256 option contracts. Box 10 shows realized profit or loss on contracts closed during 2020. Box 11 displays the year-end adjustment for contracts that were open as of December 31, 2019, reconciling the prior year's mark-to-market treatment with actual results. Box 12 shows unrealized profit or loss on contracts still open on December 31, 2020, 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 amount on Form 6781, not on Form 8949 or Schedule D. The 2020 instructions require exclusive use of Form 6781 for these contract types, which receive special tax treatment with 60 percent classified as long-term and 40 percent as short-term regardless of actual holding period.
Step 9: Reconcile Withholding and Barter Income
Check Box 4 for federal income tax withheld through backup withholding. Include this amount on your 2020 income tax return as tax withheld. Backup withholding occurs when you fail to provide a valid taxpayer identification number or when the IRS notifies the broker of identification problems. The backup withholding rate for 2020 is 24 percent.
Review Box 14 for barter exchange proceeds. When Box 14 reports an amount, you received cash, property, services, or trade credits from a barter exchange. The fair market value of all property and services received is taxable income under 2020 Publication 525 guidance. Report barter income on Schedule 1 of Form 1040 or Form 1040-SR as other income.
Step 10: File Return by Due Date
Complete Form 8949 and Schedule D using information from all Forms 1099-B received. Do not attach Copy B of Form 1099-B to your tax return. Keep Copy B with your tax records for at least three years. The IRS receives Copy A directly from the broker. Report the information from Form 1099-B on Form 8949 and carry totals to Schedule D. The payer must furnish Copy B to you by February 16, 2021, and file Copy A with the IRS by March 1, 2021, for paper filing or March 31, 2021, for electronic filing.
File your complete 2020 tax return by the applicable deadline. If you are a nonresident alien and received proceeds subject to foreign tax withholding, the payer may issue Form 1042-S instead of Form 1099-B. Do not report the same proceeds on both forms to avoid duplicate reporting.
Key Form Changes for 2020
Wash Sale Reporting Clarification
The 2020 instructions explicitly state that Box 1g shows the amount of nondeductible loss in a wash sale transaction. Earlier versions indicated wash sales would be reported when applicable, but the 2020 instructions provide enhanced detail on the disallowance calculation. The instructions confirm that the disallowed loss cannot be deducted on the 2020 tax return and that the basis of the replacement security increases by the disallowed amount, preserving the economic loss for recognition when the replacement security is eventually sold.
Noncovered Security Box Clarification
The 2020 instructions explicitly confirm that when Box 5 is checked, indicating a non-covered security, boxes 1b, 1e, 1f, 1g, and Box 2 may be blank. Early versions of basis reporting rules specified noncovered securities but did not fully articulate which boxes would remain blank. The 2020 clarification emphasizes that recipients must obtain a basis from independent records and report on Form 8949, without relying on a payer-reported basis, when Box 5 is checked. This places full responsibility on taxpayers to maintain accurate records of purchases for non-covered securities.
Important Reminders
Maintain comprehensive records for all securities transactions, including purchase confirmations, monthly statements, and documentation of corporate actions. For noncovered securities, you bear sole responsibility for accurate basis determination. Brokers identify wash sales within a single account but cannot track wash sales across multiple accounts or between different brokers. Review all trading activity to identify any additional wash sales that require adjustment. Consult Publication 550 for detailed guidance on capital gains and losses, basis adjustments, and special transaction types.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
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.
