Form 8949

Definition of 'Form 8949'


An Internal Revenue Service form implemented in tax year 2011 for individual taxpayers to report capital gains and losses from investment activity. Taxpayers must use form 8949, Sales and Other Dispositions of Capital Assets, to report short- and long-term capital gains and losses from sales or investment exchanges. In previous years, taxpayers used schedule D to report such transactions. Starting in 2012, partnerships and corporations were also required to use form 8949.

Investopedia explains 'Form 8949'


The transactions that taxpayers must report on form 8949 are reported by financial institutions to the IRS and to taxpayers using form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Taxpayers must use a separate form 8949 to report each category of financial transaction. They also must use form 8949 to correct any inaccuracies in the data reported on form 1099-B.
 
The types of transactions that must be reported on form 8949 include distributed capital gains, undistributed capital gains, sale of a main home, sale of capital assets held for personal use, sale of a partnership interest, capital losses, nondeductible losses, losses from wash sales, short sales, gains or losses from options trading, and disposition of inherited assets. This form is also used to report gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit, nonbusiness bad debts, and undistributed long-term capital gains from form 2439. Large partnerships and corporations may choose to also use form 8949 to report their share of gain or loss from a partnership, S corporation, estate or trust. The new requirements under form 8949 can be burdensome for active traders, especially those who trade the same investments in accounts with more than one brokerage company.




Filed Under: ,

comments powered by Disqus
Hot Definitions
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  2. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  3. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  4. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  5. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
Trading Center