Form 8949 (2020) Checklist
Purpose and Filing Requirements
Form 8949 reports sales and dispositions of capital assets for the 2020 tax year. The Internal Revenue Service requires taxpayers to use this form to reconcile amounts reported on Form 1099-B or Form 1099-S with the figures that appear on Schedule D. You must complete Form 8949 before transferring totals to Schedule D lines 1b, 2, 3, 8b, 9, or 10. The form separates transactions by holding period and basis reporting status, which allows the IRS to match broker-reported information with your tax return.
Determining Holding Period and Transaction Categories
You must classify each transaction as short-term or long-term based on the length of time you held the asset. Short-term capital gains apply to assets held for one year or less. Long-term gains apply to assets held for more than one year. To calculate the holding period, begin counting on the day after you acquired the property and include the day you disposed of it. This calculation method appears in the 2020 instructions and applies to stocks, bonds, real estate, and digital assets.
Review all Form 1099-B statements from brokers to identify whether the basis was reported to the IRS. Box 3 on Form 1099-B indicates this reporting status. Each statement indicates whether the broker provided the IRS with cost basis information, along with the proceeds from the sale. You will use this reporting status to determine which box to check on Form 8949.
Selecting the Correct Box for Each Part
Part I covers short-term transactions and requires you to check one of three boxes:
● Box A applies when Form 1099-B shows the basis was reported to the IRS and no adjustments are needed.
● Box B applies when Form 1099-B shows that the basis was not reported to the IRS or does not include basis information.
● Box C applies when you did not receive Form 1099-B for the transaction.
Part II covers long-term transactions using the same reporting logic:
● Box D applies when Form 1099-B shows the basis was reported to the IRS.
● Box E applies when Form 1099-B shows that the basis was not reported to the IRS or omits basis information.
● Box F applies when you did not receive Form 1099-B for the transaction.
You must complete separate forms when multiple boxes apply within the same holding period category.
Exception 1: Bypassing Form 8949 for Certain Transactions
This exception applies only to transactions meeting all of these requirements:
● Form 1099-B shows the basis was reported to the IRS.
● Boxes 1f and 1g show no adjustments.
● The Ordinary box in box 2 remains unchecked.
● You need no adjustments to basis, gain, or loss.
● You are not electing to defer income through a qualified opportunity fund investment.
Qualifying short-term transactions are reported directly on Schedule D, line 1a. Qualifying long-term transactions are reported directly on Schedule D, line 8a. This exception reduces paperwork for routine brokerage transactions that require no adjustments.
Completing Columns and Calculating Gain or Loss
List each transaction on a separate row using columns (a) through (h). Column (a) requires a description of the property, including stock ticker symbols or the number of shares. Column (b) requires the acquisition date in the format of month, day, and year. Column (c) requires the sale or disposition date in the same format. Column (d) requires proceeds from the sale as shown on Form 1099-B. Column (e) involves cost or other basis.
Enter adjustment codes in column (f) only when column (g) contains an adjustment amount. The 2020 instructions provide a comprehensive list of valid codes for wash sales, corporate actions, like-kind exchanges, and basis corrections. Column (g) holds the adjustment amount, which you must enter as a negative number in parentheses when appropriate. Column (h) contains the calculated gain or loss, which equals column (d) minus column (e) plus column (g).
Understanding Basis Reporting Requirements
Brokers must report basis to the IRS for covered securities under Section 6045(g). Basis reporting became mandatory on a phased schedule, depending on the type of security. Stocks acquired after 2010 generally required basis reporting, with mutual funds and dividend reinvestment plans following after 2011.
Debt instruments, options, warrants, and stock rights acquired after 2013 are subject to basis reporting. Variable rate debt instruments, inflation-indexed debt instruments, contingent payment debt instruments, convertible debt instruments, and specific options acquired after 2015 also required basis reporting.
Reporting Adjustments and Special Situations
You must adjust the basis when brokers report incorrect amounts on Form 1099-B. Enter the basis as reported to the IRS in column (e), then enter the correction amount in column (g) with the appropriate adjustment code in column (f).
This process alerts the IRS to basis discrepancies and prevents matching errors. Wash sales require adjustments when you sell securities at a loss and purchase substantially identical securities within 30 days before or after the sale. Corporate actions such as stock splits, mergers, and spin-offs may also require basis adjustments.
Completing Totals and Transferring to Schedule D
Calculate totals for line 2 by adding all amounts in columns (d), (e), (g), and (h) for each box you checked. Transfer these totals to the corresponding Schedule D line:
● Line 1b for Box A
● Line 2 for Box B
● Line 3 for Box C
● Line 8b for Box D
● Line 9 for Box E
● Line 10 for Box F”
Attach Form 8949 to Schedule D before filing with your 2020 tax return. Complete additional Form 8949 pages when you have more transactions than fit on one form for a single box, ensuring all pages use the same box designation and taxpayer identification number.
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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.
