Form 1099-B: Proceeds From Broker and Barter Exchange Transactions (2022)

Form 1099-B is an IRS information return that reports proceeds from selling investments through a broker or from participating in barter exchanges. If you sold stocks, bonds, mutual funds, options, commodities, or other securities through a brokerage account in 2022, your broker sent you (and the IRS) this form showing the details of those sales. The form also covers transactions where you exchanged goods or services through a barter exchange network.

Think of Form 1099-B as your investment transaction receipt. It tells you—and the IRS—how much money you received from selling securities, what you originally paid for them (called “cost basis”), and whether you held them long enough to qualify for preferential long-term capital gains tax rates. The form includes critical information like the sale date, purchase date, sale proceeds, and whether the gain or loss is short-term (held one year or less) or long-term (held more than one year).

Brokers must issue Form 1099-B for each person for whom they sold securities, who received cash or stock from certain corporate restructurings, or who exchanged property or services through a barter exchange. The form distinguishes between “covered securities” (where the broker tracks your cost basis) and “noncovered securities” (where you're responsible for determining your original investment cost).

Source: IRS Form 1099-B Instructions

When You’d Use It (Late/Amended Filing)

Standard Timeline

Brokers must mail or make available Form 1099-B to recipients by February 15, 2023 (for tax year 2022). The IRS requires brokers to file these forms by February 28, 2023, if filing on paper, or March 31, 2023, if filing electronically.

If You Received It Late

If you filed your 2022 tax return before receiving your Form 1099-B, you must file an amended return using Form 1040-X to report the transactions. You generally have three years from the original filing deadline (or two years from when you paid the tax, whichever is later) to amend your return and claim any refund you're owed.

If You Received a Corrected Form

Brokers sometimes issue corrected Forms 1099-B if they discover errors in the original. If you receive a corrected form after you've already filed your taxes, you need to determine whether the changes affect your tax liability. If the corrections result in different capital gains or losses, file Form 1040-X to amend your return. The IRS prefers corrections within three years of the initial filing date.

Late Filing by Taxpayers

If you simply forgot to include transactions from your Form 1099-B on your original return, file an amended return as soon as possible. The IRS matches Forms 1099-B against tax returns, and missing transactions often trigger a CP2000 “Underreported Income” notice, which proposes additional taxes, penalties, and interest.

Sources: IRS General Instructions, IRS Amended Return Guidelines

Key Rules for 2022

1. Covered vs. Noncovered Securities:
   Covered securities include stocks acquired after 2010, mutual funds acquired after 2011, and certain debt instruments and options acquired after 2013. For covered securities, brokers must report cost basis, acquisition date, and holding period to the IRS. For noncovered securities, you're responsible for reporting this information yourself.
2. Cost Basis Reporting:
   Brokers calculate cost basis for covered securities using the information they have, including any corporate actions like stock splits or mergers. If securities were transferred, the receiving broker relies on a “transfer statement.” Missing or incomplete statements can cause missing cost basis data.
3. Short-Term vs. Long-Term Treatment:
   Short-term (≤1 year) gains/losses are taxed at ordinary income rates. Long-term (>1 year) are taxed at preferential rates (0%, 15%, or 20%). Form 1099-B indicates the category in Box 2.
4. Wash Sale Adjustments:
   Losses are disallowed if substantially identical securities were purchased within 30 days before/after the sale. Brokers report wash sales within the same account (Box 1g). Cross-account wash sales are your responsibility.
5. Multiple Forms for Single Transactions:
   Brokers may issue multiple Forms 1099-B for a single transaction, distinguishing between covered and noncovered securities.
6. Barter Exchange Income:
   The fair market value of goods or services received through barter is taxable income. Barter exchanges report each transaction separately unless involving corporate members.

Source: IRS 2022 Instructions for Form 1099-B

Step-by-Step: How to Use Form 1099-B (High Level)

Step 1: Gather All Your Forms

Collect every Form 1099-B you received from all brokers. Review each for accuracy—check that share counts, dates, and proceeds match your records.

Step 2: Verify Cost Basis Information

For covered securities, confirm Box 1e matches your records. For noncovered securities (Box 5 checked), determine the cost basis from your own records.

Step 3: Organize by Holding Period and Basis Reporting

Separate transactions into categories based on Form 8949 checkboxes:

• Box A: Short-term transactions (basis reported to IRS)
• Box B: Short-term transactions (basis NOT reported)
• Box D: Long-term transactions (basis reported)
• Box E: Long-term transactions (basis NOT reported)

Step 4: Complete Form 8949

Transfer information to Form 8949, reporting each transaction with property description, acquisition/sale dates, proceeds, cost basis, and adjustments (e.g., wash sale losses).

Step 5: Calculate Totals on Schedule D

Add totals from all Form 8949 sections and enter them on Schedule D. This form calculates your net gains or losses that flow to Form 1040.

Step 6: Reconcile with IRS Records

Ensure every transaction reported on Form 1099-B appears somewhere on your return. You can make adjustments but must show the original reported data.

Sources: IRS Form 8949 Instructions, IRS Schedule D Information

Common Mistakes and How to Avoid Them

Mistake #1: Not Reporting All Transactions

Issue: Forgetting to report all transactions may trigger IRS notices.
Fix: Report every sale, even losses—they can reduce your tax liability.

Mistake #2: Incorrect Cost Basis

Issue: Brokers may have incomplete or wrong basis data.
Fix: Compare Box 1e to your own records and use Form 8949 adjustments if needed.

Mistake #3: Missing Wash Sale Adjustments Across Accounts

Issue: Wash sales across different brokers aren’t automatically tracked.
Fix: Review all accounts and disallow losses manually on Form 8949.

Mistake #4: Double-Counting Employee Stock Compensation

Issue: RSUs and stock options may cause double taxation if basis doesn’t include W-2 income.
Fix: Adjust the cost basis to include income already reported on your W-2.

Mistake #5: Ignoring Corrected Forms

Issue: Ignoring corrected 1099-B forms can trigger IRS mismatches.
Fix: File an amended return (Form 1040-X) if the correction changes your tax liability.

Mistake #6: Misreporting TIN or Mismatched Names

Issue: Name/TIN errors delay processing and can cause backup withholding.
Fix: Ensure SSN/TIN and names exactly match your tax return and Social Security card.

Source: IRS General Instructions for Certain Information Returns

What Happens After You File

Immediate IRS Matching

The IRS compares Forms 8949/Schedule D with the Forms 1099-B filed by brokers.

CP2000 Notices for Discrepancies

If mismatches occur, the IRS sends a CP2000 notice proposing tax, penalties, and interest. You can respond to dispute or accept the adjustment.

Refund Processing

Refunds typically issue within 21 days for e-filed returns. Returns with capital losses or paper filings may take longer.

Record Retention Requirements

Keep your Forms 1099-B, 8949, and supporting records for at least three years (six if underreported income).

Future Tax Year Implications

Unused capital losses can offset up to $3,000 ($1,500 MFS) of ordinary income per year, carrying forward indefinitely.

State Tax Returns

Most states require reporting of gains/losses from federal Schedule D. Check for state-specific rules.

Sources: IRS Topic 409, IRS Instructions for Form 1099-B

FAQs

Q1: I received Form 1099-B showing a sale, but I didn't actually receive any money. Do I still have to report it?

Yes. Even if proceeds were reinvested or used to pay fees, the transaction is reportable on Form 8949.

Q2: My Form 1099-B shows I sold stock, but Box 1e (cost basis) is blank. What do I do?

That means it’s a noncovered security. Determine your own cost basis and report the sale using Box B or E on Form 8949.

Q3: Can I just report the net gain or loss instead of listing every transaction?

Generally, no. The IRS requires separate reporting unless all securities are covered and basis was reported (Boxes A or D).

Q4: I sold cryptocurrency through my broker. Does that appear on Form 1099-B?

For 2022, it may or may not. Report all crypto sales on Form 8949 regardless. Future years will expand digital asset reporting.

Q5: What if I sold shares I inherited or received as a gift?

Inherited securities use a “stepped-up” basis (FMV at date of death). Gifts use the donor’s basis. Adjust your Form 8949 accordingly.

Q6: My broker made an error on Form 1099-B. Should I get them to issue a corrected form before filing?

Yes, if possible. If not, file with correct info and use Form 8949 adjustments to document differences.

Q7: I participated in a barter exchange where I traded services. How does Form 1099-B affect my taxes?

Barter income is taxable at fair market value and reported on Schedule C (not Schedule D). The IRS treats bartered services as cash income.