Form 1099 B and broker statements

After a broker handles your sale of shares, bonds, or certain commodities, expect either its substitute statement or Form 1099 B. You use that document to complete Form 8949 and/or Schedule D, as applicable. Receiving a substitute statement instead of Form 1099 B does not change that use.

Your reporting obligation also covers taxable sales for which you receive no Form 1099 B. You must report all taxable sales of stocks, bonds, commodities, and similar property on Form 8949 and/or Schedule D, as applicable. The absence of a broker form does not remove that requirement.

The Form 1099 B instructions identify covered securities with short term gain or loss, covered securities with long term gain or loss, and noncovered securities if the filer chooses to check box 5 when reporting their sale. Noncovered securities are securities that are not covered securities. Your statement may therefore include transactions in these different categories.

If you are reporting the sale of a noncovered security on a separate Form 1099 B, you may check box 5 and leave boxes 1b, 1e, 1f, 1g, and 2 blank. If you check box 5, you may instead choose to report the information requested in those boxes. You are not subject to penalties under section 6721 or 6722 for reporting that information incorrectly under this rule.

When you receive a Form 1099 B with basis shown, that amount alone does not establish that basis was reported to the IRS. In the supplied IRS example, box 1e contains basis but box 12 is unchecked. The unchecked box means that basis was not reported to the IRS.

If you receive Form 1099 B, Form 1099 DA, Form 1099 S, or a substitute statement, you always enter its proceeds in column (d) of Form 8949. You use the proceeds shown on the form or statement. If those proceeds need a correction or adjustment, you make it in column (g).

If your Form 1099 B, Form 1099 DA, or substitute statement shows that basis was reported to the IRS, you always enter the basis shown in column (e). You make any needed correction or adjustment to that amount in column (g). This instruction specifically addresses forms and statements showing that basis was reported to the IRS.

In the IRS example involving $6,000 of proceeds and $2,000 of basis, you report the transaction on Form 8949 when the basis reporting box is unchecked. You do not report that transaction on Schedule D line 1a or line 8a. For Form 1099 B, the example uses proceeds in box 1d, basis in box 1e, and an unchecked box 12.

When you prepare Form 1099 B, you enter gross cash proceeds from dispositions of securities, commodities, options, securities futures contracts, or forward contracts, including short sales. You must reduce proceeds by commissions and transfer taxes related to the sale. You show a loss, such as a loss from a closing transaction on a written option or forward contract, as a negative amount in parentheses.

When you complete the sale date column on Form 8949, you enter the date you sold or disposed of the property. For stocks and bonds traded on an exchange or over the counter market, you use the trade date. For a short sale, you use the date you delivered the property to the broker or lender to close the short sale.

For a long term transaction, you use Part II with box F or box L checked when you cannot check box D, E, J, or K because you did not receive Form 1099 B, Form 1099 DA, or a substitute statement. You must use box L for a digital asset transaction. You do not use box F for digital asset transactions.

If your transaction produces a nondeductible loss, you report it in Part I or Part II of Form 8949 depending on how long you held the property. You complete all columns. Unless you received Form 1099 B or Form 1099 DA for the sale or exchange, you check box C or box I in Part I, or box F or box L in Part II, depending on how long you owned the property.

If you sell shares acquired through equity compensation, the broker basis reporting rules generally require the broker to report only the cash you paid for the shares. Since the 2014 regulatory change, that reported amount generally excludes the compensation income component. For your restricted stock units, or RSUs, the cash paid is zero, so Form 1099 B may show zero, leave basis blank, or mark basis as not reported to the IRS.

In an illustrative missing basis correction example, you enter code B in column (f) and a negative adjustment for the missing basis in column (g). The example shows $35,000 of proceeds, $0 basis, a ($30,000) adjustment, and a $5,000 gain in column (h). You do not simply overwrite column (e) in that example because the IRS matches it against the broker filing.

If you transfer custody of a specified security to a broker, the transfer statement requirement applies after 2010 generally. It applies after 2011 for stock in a regulated investment company and after 2014 for certain debt instruments, options, and securities futures contracts. When the requirement applies to your transfer, you must give the broker a written transfer statement within 15 days after the settlement date.

If you are the Form 1099 B filer and receive a transfer statement indicating that the security is covered, you must file a corrected Form 1099 B within 30 days of receiving that statement. You do not have to file the corrected form under this rule if you receive the statement more than 3 years after filing the original Form 1099 B.

For certain sales or exchanges of your digital assets through brokers, the final regulations require reporting on Form 1099 DA beginning with transactions on or after January 1, 2025. The regulations apply to brokers that take possession of the digital assets their customers sell. These include operators of custodial digital asset trading platforms, certain hosted wallet providers, digital asset kiosks, and certain processors of digital asset payments.

If you are filing for transactions involving dual classification assets that are tokenized securities, you use Form 1099 DA rather than Form 1099 B. A tokenized security is a dual classification asset giving you an interest in another asset that is a security otherwise subject to Form 1099 B reporting.

If you are a broker reporting transactions occurring in calendar year 2025 and reported in 2026, the IRS provides limited penalty relief. The IRS does not impose penalties for failure to file and furnish Forms 1099 DA if you make a good faith effort to file the forms and furnish associated payee statements correctly and on time.

For your digital asset sales occurring during calendar year 2025, brokers are not required to report basis. The final regulations delay cost basis reporting to sales occurring on and after January 1, 2026. Basis reporting is limited to digital assets acquired after the reporting requirement takes effect and acquired, held until sale, and sold within the same custodial broker.

For your digital assets transferred between brokers, the supplied reporting rules do not require cost basis reporting. Transfer statements communicating token basis between brokers are not required under the supplied guidance. You need to track that basis in your own records.

If you are a broker reporting customer sales after 2025 of digital assets that are noncovered securities, you are not required to report basis information. You may report it voluntarily. If you check box 9 to identify the assets as noncovered securities, you are not subject to penalties under section 6721 or 6722 for failing to report or furnish that information correctly.

When you receive Form 1099 DA, some forms may contain broker reported basis while others may contain proceeds only. Even reported basis depends for completeness on what the broker knows about your acquisition history. You remain responsible for reconciling reported proceeds with basis, holding period, transaction costs, and other relevant facts.

When you receive Form 1099 DA, you need to connect its information to wallet histories, exchange records, transfer activity, and supportable basis calculations. When reporting is required, the broker furnishes information to you and files it with the IRS. That gives the IRS information to compare against your return, although the broker information may not contain the full history needed to determine your gain or loss.

If your digital asset activity creates a taxable event, you remain responsible for accurately reporting it even if no Form 1099 reports the transaction. This includes your transactions without a broker and your on chain transactions using a noncustodial wallet.