What IRS Form 1099-B (2024) Is For
IRS Form 1099-B reports sales of capital assets such as stocks, bonds, mutual funds, and other securities for the current tax year, and the form supports entries used on the tax return. Brokers prepare one form to document the acquisition date, adjusted basis, sale proceeds, and gain or loss for each investment transaction in the ordinary course of business. Investors review this information to prepare entries for Schedule D and to support accurate reporting.
The form includes details for stock sales, capital gain distributions, exchange-traded funds, commodities, and money market fund transactions that involve various securities. Brokers list CUSIP numbers, separate statements, shares sold, involuntary conversions, and other forms that help identify each subject security accurately. Additional resources assist investors in confirming transaction details for accurate reporting.
When You’d Use IRS Form 1099-B (2024)
Investors use Form 1099-B when they sell stocks, bonds, mutual funds, or other securities during the calendar year. Brokers issue the form when transactions occur through an account that holds common stock, personal property, or exchange-traded funds. The form also applies to proceeds from short sale closings or sales involving debt obligations.
Investors rely on the form when the wash sale rule applies because the purchase of the same security occurred in the same year. The rule also applies when substantially identical securities appear across separate accounts for the same taxpayer. The form helps identify whether a transaction occurred within the restricted period for wash sales and whether an exception applies. Receipt of a corrected form requires a careful review to ensure that each entry aligns with updated transaction details.
Key Rules or Details for 2024
Investors must review whether securities are covered or non-covered because brokers report different information for each category. Covered securities include common stock, mutual funds, exchange-traded funds, and bonds purchased after specific dates, and brokers report basis directly to the IRS. Non-covered securities require the investor to determine the adjusted basis, holding period, and gain or loss calculation.
The wash sale rule applies when the investor purchases the same security within thirty days of selling it at a loss. Brokers note these wash sales in the relevant information fields when the rule applies during the current tax year. Investors must also consider transactions involving money market funds, commodities, and other securities. Each transaction may affect gains and losses for the year.
Step-by-Step (High Level)
Step 1: The preparer gathers every Form 1099-B and each separate statement that is issued for the current tax year. Each document must list the acquisition date, adjusted basis, sale proceeds, and CUSIP number. The preparer reviews forms for stock sales, mutual funds, exchange-traded funds, and other securities that are held in the account.
Step 2: The preparer sorts transactions into short-term, long-term, covered, and non-covered categories for reporting. The categorization includes sales of commodities, bonds, money market fund shares, and stock that a corporation or an individual sells. The preparer records an example in the internal notes when transactions occur on the same day or involve combinations of securities.
Step 3: The preparer transfers the entries to Form 8949 and Schedule D. The entries must include gains, losses, and nonbusiness bad debts as applicable. The preparer consults additional resources that explain each required entry.
Common Mistakes and How to Avoid Them
Taxpayer filings often face delays when investment information contains recurring reporting mistakes. These mistakes interrupt processing because omissions or inconsistencies prevent accurate matching. Correcting these items improves compliance and supports orderly review of reported transactions.
- Mismatched Identification Numbers: This mistake occurs when the taxpayer identification number on Form 1099-B does not match the identification number on the tax return. The taxpayer must confirm matching numbers on all forms before filing.
- Incorrect Basis Reporting: This mistake occurs when the adjusted basis on Form 1099-B differs from brokerage statements. The taxpayer must verify basis entries using complete records.
- Unreported Wash Sales: This mistake occurs when required wash sale adjustments do not appear on Form 8949. The taxpayer must review brokerage reports for transactions involving substantially identical securities.
- Missing Supplemental Statements: This mistake occurs when statements supporting mutual fund, commodity, or exchange-traded fund transactions are omitted. The taxpayer must attach all relevant documentation for accurate reporting.
What Happens After You File
The IRS reviews information provided by brokers and compares each reported sale to the entries on the tax return. The IRS uses automated systems to verify acquisition date details, adjusted basis amounts, and sales proceeds listed on the form. Investors may receive a CP2000 notice if reported information differs from the broker’s records.
The notice outlines differences for stock sales, mutual funds, exchange-traded funds, and other securities. Investors must respond with documentation that supports the reported figures for gains and losses. Some investors may need to file an amended return when incorrect totals appear on Schedule D or Form 8949. A careful review of each transaction helps prevent delays during the matching process for the current tax year.
For guidance on capital gains reporting and correction steps, visit our IRS Form Help Center.
FAQs
How is a capital asset reported on Form 1099-B?
A capital asset reported on Form 1099-B includes stock, mutual fund shares, bonds, or similar investments. The broker lists the acquisition date, proceeds, adjusted basis, and gain or loss for each transaction. The taxpayer uses these entries to calculate short-term or long-term capital gain amounts for the tax return.
How does Schedule D report gains and losses that originate from Form 1099-B?
Schedule D reports gains and losses that appear on Form 1099-B after the taxpayer completes Form 8949. The form groups transactions into short-term and long-term categories based on the holding period. The taxpayer transfers totals to Schedule D and confirms that each calculation matches the reported securities data.
What additional resources support Form 1099-B reporting for the current tax year?
Additional resources include brokerage statements, Form 8949 instructions, and IRS publications for investment income. These resources explain how to record interest, cash proceeds, adjustments, and other required entries. The taxpayer reviews these materials to confirm that all transactions appear correctly for the current tax year.
Why does a CUSIP number appear on transactions that show a gain or loss?
A CUSIP number identifies each security reported on Form 1099-B and links the security to its trade records. Brokers use the number to match the security to proceeds, basis, and gain or loss information. The taxpayer uses the number to confirm accuracy when preparing Form 8949 and Schedule D.
How does the Schedule D form distinguish short-term and long-term capital gain entries?
The Schedule D form separates short-term and long-term capital gain entries based on whether the holding period exceeds one year. Short-term items appear in Part I, and long-term items appear in Part II. The taxpayer reviews Form 1099-B to ensure each transaction shows the correct category before reporting totals.
