What Is Form 1099-B?
Form 1099-B: Proceeds From Broker and Barter Exchange is a federal tax form that itemizes a taxpayer's gains or losses in every transaction made over the course of a tax year. The broker or barter exchange must mail a copy of the form to all clients by January 31st of the year following the tax year.
Taxpayers transfer the information from Form 1099-B to Form 8949 to calculate their preliminary gains and losses. The result is entered onto Schedule D of the tax return.
- Form 1099-B is sent by brokers to their customers. It itemizes all transactions made during a tax year.
- Individuals use the information to fill out Schedule D listing their gains and losses for the tax year.
- The sum total is the individual's taxable gain (or loss) for the year.
Who Can File Form 1099-B?
Brokers must submit this form to the IRS as well as sending a copy directly to every customer who sold stocks, options, commodities, or other securities during the tax year. The IRS requires submission of the form to serve as a record of a taxpayer’s gains or losses.
For example, assume you sold several stocks last year. The proceeds of the sale were $10,000. That figure will be reported to the IRS from two sources: One from the brokerage on a Form 1099-B and the second from you as a report of a taxable capital gain.
Information on the Form 1099-B includes a description of each investment, the purchase date and price, the sale date and price, and the resulting gain or loss. Commissions for these transactions are excluded.
As a taxpayer, your capital losses are subtracted from any capital gains and may be used to reduce the taxable income you report. There are limits to the amount of capital loss that can be deducted each tax year. However, if the capital loss exceeds the limit, the difference may be carried over to the following tax year or years.
Form 8949 is used for a preliminary calculation of gains or losses from investments.
How to File Form 1099-B
A broker or barter exchange should report each transaction (other than regulated futures, foreign currency, or Section 1256 option contracts) on a separate Form 1099-B.
A separate Form 1099-B must be filed for whoever has sold (including short sales) stocks, commodities, regulated futures contracts, foreign currency contracts (pursuant to a forward contract or regulated futures contract), forward contracts, debt instruments, options, or securities futures contracts.
Additional Uses of Form 1099-B
A company that participates in certain bartering activities with another company may need to file a Form 1099-B. It is used to report changes in capital structure or control of a corporation in which you hold stock.
The form will report the cash received and the fair market value of goods or services received or any trade credits received.
Taxpayers may be required to report the receipt of gains made during the bartering activity. Reportable gains can be in the form of cash, property, or stock.
Form 1099-B is used by brokerages and barter exchanges to record customers' gains and losses during a taxable year. Individual taxpayers will receive the form from their brokers already filled out.
Other Relevant Forms
If you receive a 1099-B, you will need to file a Schedule D. This is where you record your gains and losses for the year. Form 8949 is used to record the details of the transactions.