What Is Form 1099-B: Proceeds From Broker and Barter Exchange Transactions?
Form 1099-B, Proceeds From Broker and Barter Exchange Transactions is an Internal Revenue Service (IRS) tax form used by brokerages and barter exchanges to record customers' gains and losses during a tax year.
Individual taxpayers receive the form from their brokers or barter exchange already filled out. Taxpayers transfer the information from a 1099-B toForm 8949to calculate their preliminary gains and losses. The result is entered ontoSchedule Dof their tax return.
Key Takeaways
- Form 1099-B is sent by brokers to their customers for tax filing purposes.
- The form 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.
- Brokerage firms and those that deal in bartering activities must file separate forms even if sales of different securities took place in a single transaction.
Who Can File Form 1099-B: Proceeds From Broker and Barter Exchange Transactions?
Brokers must submit a 1099-B form to the IRS and send 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. Forms are required to be sent to investors by February 15.
For example, let's assume you sold several stocks last year. The proceeds of the sales were $10,000. That figure will be reported to the IRS by the brokerage via a 1099-B form and by you as a report of a taxable capital gain.
The form may also be filed by companies that participate in certain bartering activities with others.For this, the form is used to report changes in capital structure or control of a corporation in which you hold stock.
The broker or barter exchange must mail a copy of a 1099-B form to all clients by Feb. 15 of the year following the tax year. If you don't receive yours, contact the issuer for a replacement copy.
How to File Form 1099-B: Proceeds From Broker and Barter Exchange Transactions
A separate Form 1099-B must be filed by a brokerage or barter exchange for every single transaction involving the sale (including short sales) of 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.
Information on Form 1099-B includes:
- Issuer's information
- Taxpayer's information
- A description of each investment
- The purchase date and price
- The sale date and price
- The resulting gain or loss
Commissionsfor these transactions do not apply and are, therefore, excluded from the form.
As a taxpayer, your capital lossesare 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 deductedeach tax year. However, if the capital loss exceeds the limit, the difference may be carried over to the following tax year(s).
The form reports the cash received and the fair market value (FMV) 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.
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.
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Other Relevant Forms
If you receive a 1099-B, you will need to file Schedule D. This is where you record your gains and losses for the year. Form 8949, Sales and Other Dispositions of Capital Assets is used to record the details of the transactions.
What Is Form 1099-B Used for?
Form 1099-B is used to report capital gains and losses that a taxpayer incurs after selling certain assets through brokerages and barter exchanges. These firms send separate forms for each transaction to both the IRS and the investor.
How Do You Report 1099-B on Your Tax Return?
You must report the information found on Form 1099-B on Schedule D and/or Form 8949 as capital gains or losses.
How Do You Read Form 1099-B?
Issuers include their information and yours on Form 1099-B. It also includes a description of the property sold, the acquisition date, the sale date and price, the original price, and any deductions that apply. Other information includes any federal tax withheld, gains or losses incurred, and state tax withholdings.
Do I Have to Report 1099-B on My Taxes?
While you don't send the actual Form 1099-B to the IRS with your tax return, you must include the information that's on it on Form 8949 and send that along with Schedule D, which is what you'll use to record your totals for all transactions shown on Form 8949.
Is 1099-B Earned Income?
No. 1099-B reports capital gains and losses. A capital gain or loss results from selling an asset you own, such as a stock, stock option, or bond. Earned income is income you receive from your employment.
The Bottom Line
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions is the form issued to taxpayers that reports their capital gains and losses for the tax year. It is sent by the broker or barter exchange to clients and the IRS.
Taxpayers don't include Form 1099-B with their tax return but they do transfer the information on it to Form 8949 to calculate their capital gains and losses. These totals are then recorded on Schedule D. Both forms should be included in the tax return sent to the IRS.
