Form 8949 (2012): Tax Year Guide & Checklist
Form 8949 reports sales and dispositions of capital assets held short-term (one year or less) and long-term (more than one year), organized by whether the basis was reported to the IRS. The form was introduced for the 2011 tax year to accommodate new broker basis reporting requirements that took effect on January 1, 2011. For stock acquired in 2011 or later, brokers are required to report basis to the IRS, creating three distinct reporting categories (Boxes A, B, C) in both Part I and Part II of the form.
Preparation Steps:
1. Determine broker basis reporting status for 2012
Identify whether you received Form 1099-B or broker substitute statements, and confirm which transactions had a basis reported to the IRS. For stock acquired in 2011 or later, brokers are required to report basis; stocks acquired before 2011 typically will not show reported basis. Most brokers issue their own substitute statements instead of using Form 1099-B, and they may provide basis information even if it was not reported to the IRS.
2. Separate short-term and long-term transactions
Short-term transactions involve capital assets held one year or less. To calculate the holding period correctly, begin counting on the day after you acquired the property and include the day you disposed of it. The acquisition date is excluded from the count, but the disposition date is included. Complete Part I for short-term transactions and Part II for long-term transactions.
3. Select the correct box (A, B, or C) for short-term transactions
Box A applies if Form 1099-B shows the basis was reported to the IRS. Box B applies if Form 1099-B shows no basis was reported to the IRS. Box C applies if transactions are not on any Form 1099-B. Do not check multiple boxes on the same page; file separate forms if needed. Each Part I must have only one box checked at the top.
4. Enter short-term transaction details in Part I, columns (a) through (h)
Column (a) requires a description of the property, including the number of shares for stock. Column (b) needs the date acquired, using the trade date for stocks and bonds traded on an exchange. Column (c) requires the date sold or disposed of, also using the trade date for exchange-traded securities. Column (d) is proceeds (sales price). Column (e) is cost or other basis; if Box A is checked and the basis was incorrectly reported to the IRS, enter the basis as reported to the IRS and correct it via column (g) adjustment code.
5. Select the correct box (A, B, or C) for long-term transactions
Use the same criteria as short-term transactions to select the appropriate box. Box A is for transactions reported on Form 1099-B, showing that the basis was reported to the IRS. Box B is for transactions reported on Form 1099-B, indicating that the basis was not reported to the IRS. Box C is for transactions not reported on Form 1099-B. Complete separate Form 8949 pages if multiple boxes apply to your long-term transactions.
6. Enter long-term transaction details in Part II, columns (a) through (h)
Apply the same basis entry rules as Part I, following the instructions for each column. If Box A is checked and the reported basis is incorrect, enter the reported basis in column (e) and the adjustment in column (g) with the corresponding code in column (f). Use the Worksheet for Basis Adjustments in Column (g) provided in the instructions to calculate the proper adjustment amount.
7. Calculate gain or loss in column (h) for all transactions
Subtract column (e) from column (d), then combine with column (g) adjustment to determine your gain or loss. Enter gains as positive numbers and losses as negative amounts in parentheses or with a minus sign. Complete this calculation for each transaction row before totaling the results.
8. Complete totals in line 2 (Part I) and line 4 (Part II)
Add columns (d), (e), (g), and (h), subtracting negative amounts properly. Transfer totals to Schedule D: Part I totals go to Schedule D lines 1, 2, or 3 (depending on which box you checked at the top of Part I); Part II totals go to Schedule D lines 8, 9, or 10 (depending on which box you checked at the top of Part II).
IMPORTANT FORM REQUIREMENTS FOR 2012:
Basis reporting and covered securities
Brokers must report basis to the IRS for most stock purchases in 2011 or later, making these covered securities. Generally, a covered security is stock acquired after 2010 (after 2011 if in a mutual fund or other regulated investment company, or acquired through a dividend reinvestment plan). If box 6b of Form 1099-B is not checked, the basis was not reported to the IRS, and you should report that transaction with Box B checked, not Box A.
Handling an incorrectly reported basis
If you checked Box A but the basis reported to the IRS was incorrect, you must enter the basis as reported to the IRS in column (e) and use column (g) with an adjustment code to correct the discrepancy. This is critical guidance for 2012 filers addressing the transition to broker reporting. Enter code "B" in column (f) and calculate the adjustment using the worksheet provided in the instructions.
Column (f) adjustment codes
Adjustment codes are required whenever an adjustment is entered in column (g). The instructions provide a detailed table of codes, including "B" for incorrect basis on Form 1099-B; "W" for nondeductible loss from a wash sale; "E" for selling expenses or option premiums not reflected on Form 1099-B; "H" for exclusion of gain from sale of main home; "Q" for exclusion of gain from qualified small business stock; and other codes for specific situations. If more than one code applies, enter all codes in alphabetical order without spaces or commas.
Exceptions to detailed reporting
Exception 1 allows you to report transactions on an attached statement containing all the same information as Form 8949 in a similar format, entering combined totals on the form. Exception 2 allows summary totals if you have more than five transactions for that Part and you file Form 1120S, 1065, or 1065-B, or are a taxpayer exempt from receiving Form 1099-B under Treasury Regulations. When using exceptions, enter "M" in column (f) along with any other applicable codes.
Rounding and recordkeeping
You may round off cents to whole dollars on Form 8949, but if you do, you must round all amounts consistently. Drop amounts under 50 cents and increase amounts over 49 cents to the next dollar. Maintain accurate records showing the basis and adjusted basis of your property, including purchase price, commissions, improvements, depreciation, nondividend distributions, and stock splits.
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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.
