What Form 8949 Is For

Form 8949 is the IRS form you use to report every stock, bond, mutual fund, or real estate sale where you made or lost money. Think of it as your detailed transaction log—the place where you list each individual investment you sold during 2015, including when you bought it, when you sold it, what you paid for it, and what you received when you sold it.

The main purpose of Form 8949 is reconciliation. Your broker or investment company sends information about your sales to both you and the IRS on Form 1099-B. Form 8949 allows you to verify this information matches what you're reporting on your tax return, and make any necessary corrections or adjustments. After completing Form 8949, the totals flow to Schedule D (Capital Gains and Losses), where your overall gain or loss gets calculated.

Form 8949 has two parts: Part I for short-term transactions (assets held one year or less) and Part II for long-term transactions (assets held more than one year). This distinction matters because long-term gains typically receive more favorable tax treatment than short-term gains, which are taxed as ordinary income.

When You’d Use Form 8949 (Including Late or Amended Returns)

Regular Filing: You file Form 8949 with your tax return (Form 1040) whenever you sold investment property during 2015. This includes stocks, bonds, mutual funds, real estate used for investment, and even some cryptocurrency transactions. The form is due when your tax return is due—April 15, 2016, for most taxpayers filing 2015 returns, or October 15, 2016, if you filed for an extension.

Amended Returns: If you discover errors after filing your original return—such as incorrect cost basis, missing transactions, or wrong dates—you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return). Attach a corrected Form 8949 and Schedule D showing the accurate information. Generally, you have three years from your original filing date to amend your return, so for 2015 returns filed in April 2016, you'd have until April 2019 to amend.

Late Filing: If you missed reporting investment sales on your original return, you should file an amended return as soon as you discover the omission, even if it doesn't change your tax liability. This protects you from potential penalties and ensures the IRS records match your actual transactions.

Key Rules or Details for 2015

Several important rules governed Form 8949 reporting in 2015:

Holding Period Matters: Assets held one year or less are short-term (reported in Part I); assets held more than one year are long-term (reported in Part II). The holding period begins the day after you acquire property and includes the day you sell it. For inherited property, you generally report it as long-term regardless of actual holding period.

Basis Reporting: Starting in 2011, brokers began reporting cost basis to the IRS for certain "covered securities"—primarily stocks purchased after 2010. On your 2015 Form 1099-B, box 3 indicates whether basis was reported to the IRS. This determines which checkbox (A, B, C, D, E, or F) you mark at the top of your Form 8949.

The Six Boxes: Form 8949 requires you to check one box per page:

• Box A: Short-term transactions where basis WAS reported to IRS
• Box B: Short-term transactions where basis was NOT reported to IRS
• Box C: Short-term transactions with no Form 1099-B received
• Box D: Long-term transactions where basis WAS reported to IRS
• Box E: Long-term transactions where basis was NOT reported to IRS
• Box F: Long-term transactions with no Form 1099-B received

Qualified Small Business Stock: In 2015, you could exclude up to 50%, 75%, or even 100% of gains on qualified small business stock held more than five years, depending on when you acquired it. Stock acquired after September 27, 2010, qualified for the full 100% exclusion—a significant tax break.

Wash Sale Rules: If you sold stock at a loss and bought substantially identical stock within 30 days before or after the sale, the loss is disallowed. You must add the disallowed loss to the basis of the replacement stock.

Step-by-Step (High Level)

Step 1: Gather Your Documents

Collect all Forms 1099-B from brokers, Form 1099-S for real estate sales, and your personal records showing purchase dates, sale dates, and costs for any transactions not reported on 1099s.

Step 2: Separate Transactions by Type

Sort your sales into six categories based on holding period (short-term vs. long-term) and whether basis was reported to the IRS. You'll complete a separate Form 8949 page for each category that applies.

Step 3: Complete the Form

For each transaction, report:

• Column (a): Description of property (e.g., "100 shares XYZ Corp")
• Column (b): Date acquired
• Column (c): Date sold
• Column (d): Proceeds (sales price from Form 1099-B)
• Column (e): Cost basis (what you paid)
• Column (f): Adjustment codes (if needed—usually blank)
• Column (g): Adjustment amounts (if needed—usually blank)
• Column (h): Gain or loss (subtract column e from column d)

Step 4: Total Each Page

Add up the amounts in columns (d), (e), (g), and (h) at the bottom of each Form 8949 page.

Step 5: Transfer to Schedule D

Carry the totals from your Form 8949 pages to the corresponding lines on Schedule D (lines 1b, 2, 3, 8b, 9, or 10, depending on which boxes you checked). Schedule D then calculates your overall capital gain or loss.

Step 6: Complete Your Return

The final numbers from Schedule D flow to Form 1040, where they affect your total taxable income and tax liability.

Common Mistakes and How to Avoid Them

Mistake #1: Mixing Transaction Types

Don't combine short-term and long-term transactions on the same Form 8949 page, or transactions from different boxes. Each page should have only one box checked. Use multiple pages if necessary.

Mistake #2: Incorrect Basis Reporting

If your Form 1099-B shows basis was reported to the IRS (box 3 checked), you MUST enter that exact basis in column (e), even if you think it's wrong. Make corrections in column (g) with code "B," not by changing column (e).

Mistake #3: Forgetting Adjustments

Common adjustments include wash sale losses (code "W"), selling expenses like commissions (code "E"), and home sale exclusions (code "H"). If you need to make an adjustment, always enter the appropriate code in column (f) and the adjustment amount in column (g).

Mistake #4: Omitting Transactions Without 1099-B

You must report ALL capital asset sales, even if you didn't receive a Form 1099-B. This includes private real estate sales, transactions with foreign brokers, and sales of collectibles or cryptocurrency.

Mistake #5: Wrong Holding Period Dates

Count carefully: The holding period begins the day AFTER you acquire property and includes the sale date. Miscounting by even one day can incorrectly classify a gain as short-term (taxed higher) instead of long-term.

Mistake #6: Not Reporting Personal Property Losses Correctly

Loss from selling your personal-use property (like a vacation home not rented out) isn't deductible. If you received a Form 1099-S, report the transaction but enter code "L" in column (f) and adjust the loss to zero in column (g).

Mistake #7: Ignoring the Summary Exception

If you have transactions with basis reported to the IRS and no adjustments needed, you may be able to report summary totals directly on Schedule D without completing Form 8949. This saves paperwork but only applies when specific conditions are met.

What Happens After You File

Once you file your return with Form 8949 and Schedule D:

IRS Matching Process: The IRS uses computers to match the information on your Form 8949 against the Forms 1099-B your brokers filed. If the numbers don't match, you may receive a CP2000 notice (Proposed Changes to Your Tax Return) asking you to explain the discrepancy or pay additional tax.

Refunds or Payments: If your capital losses exceeded your gains, you can deduct up to $3,000 of net capital losses against your ordinary income in 2015. Any excess loss carries forward to future years. If you had net capital gains, these increase your tax liability, which you either paid with your return or will pay if you owe additional tax.

Audit Considerations: Form 8949 transactions can be selected for audit, particularly if you reported large losses, made significant adjustments, or showed inconsistencies with broker-reported information. Keep all supporting documents—purchase confirmations, sale confirmations, and basis calculations—for at least three years after filing.

Carryover Tracking: If you have capital loss carryovers from 2015 to 2016, you'll need to track these amounts carefully. They'll be reported on your 2016 Schedule D to reduce future gains or offset future income.

State Returns: Most states require you to report capital gains and losses on your state income tax return. Your Form 8949 information typically flows to your state Schedule D or equivalent form.

FAQs

Q1: Do I really need to list every single stock transaction if I made hundreds of trades?

A: Generally yes, but there are exceptions. If you have many transactions from the same broker showing basis was reported to the IRS and requiring no adjustments, you may qualify for Exception 1 (report summary totals directly on Schedule D) or Exception 2 (attach a detailed statement instead of listing each trade on Form 8949). Most tax software handles this automatically.

Q2: What if the cost basis on my Form 1099-B is wrong?

A: If basis WAS reported to the IRS (boxes A or D), enter the incorrect basis exactly as shown in column (e), then correct it using code "B" in column (f) and the adjustment amount in column (g). If basis was NOT reported to the IRS (boxes B or E), simply enter the correct basis in column (e).

Q3: How do I report cryptocurrency sales like Bitcoin?

A: The IRS treats virtual currency as property, not currency. Report Bitcoin and other cryptocurrency sales on Form 8949, typically in Part I or II with box C or F checked (since most exchanges don't issue Forms 1099-B). List each sale separately with the date acquired, date sold, proceeds, and your cost basis.

Q4: Can I deduct investment losses against my regular income?

A: You can deduct capital losses up to the amount of your capital gains plus $3,000 ($1,500 if married filing separately) against ordinary income. Any excess loss carries forward to future years indefinitely until used up.

Q5: What's the deadline for filing an amended Form 8949 if I discover errors?

A: You generally have three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later. For 2015 returns filed in April 2016, the deadline would typically be April 2019.

Q6: Do I need Form 8949 if I only received capital gains distributions from mutual funds?

A: No. Capital gains distributions (reported in box 2a of Form 1099-DIV) go directly on Schedule D, line 13. You don't need Form 8949 unless you actually sold mutual fund shares.

Q7: How do I handle inherited property?

A: Inherited property typically gets a "step-up" in basis to fair market value on the date of death. Report inherited property sales as long-term in Part II, regardless of actual holding period. Enter "INHERITED" in column (b) where it asks for the acquisition date. For estates filing after July 31, 2015, executors must provide beneficiaries with basis information, though IRS delayed some requirements until February 29, 2016.

Note: This summary provides general guidance for 2015 Form 8949 based on official IRS instructions. Tax situations vary widely, and complex transactions may require professional assistance. For complete details, consult the official IRS Form 8949 instructions and publications available at IRS.gov.