What is Form 1099-B?
Form 1099-B: Broker and Barter Product is a federal tax form that details the gains or losses of a taxpayer in each transaction made during a taxation year. The broker or clearinghouse must mail a copy of the form to all clients by January 31 of the year following the taxation year.
Taxpayers transfer information from Form 1099-B to Form 8949 to calculate their preliminary gains and losses. The result is listed in Appendix D of the income tax return.
Key points to remember
- Form 1099-B is sent by brokers to their clients. It details all transactions made during a taxation year.
- Individuals use the information to complete Schedule D, listing their gains and losses for the taxation year.
- The 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 and send a copy directly to each client who sold stocks, options, commodities or other securities during the taxation year. The IRS requires submission of the form to serve as a record of a taxpayer’s gain or loss.
For example, suppose you sold several stocks last year. The proceeds from the sale were $ 10,000. This figure will be communicated 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.
The information on Form 1099-B includes a description of each investment, the date and the purchase price, the date and the sale price and the resulting gain or loss. Commissions for these transactions are excluded.
As a taxpayer, your capital losses are subtracted from any capital gain and can be used to reduce the taxable income you report. There are limits to the amount of capital loss that can be deducted each taxation year. However, if the capital loss exceeds the limit, the difference can be carried over to the following taxation year or years.
Form 8949 is used for a preliminary calculation of investment gains or losses.
How to File Form 1099-B
A broker or barter must report each transaction (other than regulated futures, currency or option contracts under section 1256) on a separate Form 1099-B.
A separate Form 1099-B must be filed for anyone who has sold (including short sales) stocks, commodities, regulated futures, foreign exchange contracts (under a futures contract or a regulated futures contract), futures contracts, debt securities, options or securities futures contracts.
Additional Uses of Form 1099-B
A business that participates in certain barter activities with another business may need to file a Form 1099-B. It is used to report changes in the capital structure or control of a company in which you hold shares.
The form will show the money received and the fair market value of the goods or services received or any trade credit received.
Taxpayers may be required to declare receipt of gains made during the barter activity. Reportable earnings can take the form of cash, property or stocks.
Form 1099-B is used by brokerage firms and barter exchanges to record customer gains and losses during a taxation year. Individual taxpayers will receive the completed broker form.TheThe
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.TheForm 8949 is used to record transaction details.TheThe