Form 1099-B: Proceeds From Broker and Barter Exchange Transactions

Form 1099-B is generally used to report proceeds from certain broker and barter exchange transactions and may provide information needed to report sales on a tax return.

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Introduction

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, is generally used by brokers and other applicable reporting parties to report certain transactions involving the sale or exchange of securities and other property.

A taxpayer who receives Form 1099-B may use the information when preparing a federal income tax return. The form can provide details about proceeds, dates, cost information, and other transaction information that may be relevant when determining a gain or loss.

What Is Form 1099-B?

Form 1099-B is an information return used to report certain proceeds from broker and barter exchange transactions. It may include information about securities, stocks, bonds, mutual funds, and other reportable property transactions.

The information on Form 1099-B may be used to help determine the amount of gain or loss from a transaction. The information reported on the form should generally be reviewed against the taxpayer’s own investment and transaction records.

Who Uses Form 1099-B?

Form 1099-B may be prepared by brokers, barter exchanges, and other applicable reporting parties when reportable transactions occur. Individuals and other taxpayers who sell or exchange certain investments or property may receive the form.

Not every sale or transaction results in the same type of reporting. The reporting requirements can depend on the type of transaction, property involved, and other applicable rules.

What Information Is Needed?

The information on Form 1099-B generally includes the taxpayer’s identifying information, the payer or broker’s information, transaction details, proceeds, and other information related to the sale or exchange.

Taxpayers should compare Form 1099-B with brokerage statements, purchase records, trade confirmations, and other investment records. Cost information shown on the form may not always represent the taxpayer’s complete tax basis, so supporting records can be important.

How to Fill Out/Complete Form 1099-B

Form 1099-B is generally completed by a broker, barter exchange, or other applicable reporting party rather than by the taxpayer. The form is prepared using transaction records for the applicable reporting period.

Taxpayers who receive Form 1099-B generally use the information when preparing their federal income tax return. The taxpayer should review each transaction and determine whether additional information is needed to properly report the sale or exchange.

Section 1

Enter the applicable payer and recipient information requested on Form 1099-B. This generally identifies the broker or other reporting party and the taxpayer associated with the transaction.

Review names, addresses, and taxpayer identification information carefully. Accurate identifying information can help ensure that the statement is associated with the correct taxpayer.

Section 2

Enter the transaction information requested on the form. This may include the description of the property, dates of acquisition and sale, and other transaction details.

Review the transaction information against brokerage statements and other records. Make sure the dates and descriptions reasonably match the taxpayer’s records.

Section 3

Enter the applicable proceeds from the transaction. Proceeds generally represent the amount received from the sale or exchange before considering other factors that may affect the final gain or loss.

Review the reported proceeds against transaction statements and confirmations. If the reported amount appears incorrect, the taxpayer should retain documentation and contact the appropriate broker or reporting party.

Section 4

Enter applicable cost or basis information when required. The amount shown may help the taxpayer determine the gain or loss associated with the transaction.

Taxpayers should not automatically assume that the amount shown represents their complete tax basis in every situation. Additional records may be needed to account for adjustments or circumstances not reflected on the form.

Section 5

Complete any applicable information concerning adjustments, covered or noncovered securities, withholding, or other transaction details requested by the form.

Review these items carefully because they may affect how the transaction is reported on the taxpayer’s federal income tax return. The treatment can vary depending on the type of property and transaction.

Final Review

Review Form 1099-B after all applicable information has been entered. Check the taxpayer information, transaction descriptions, dates, proceeds, cost information, and applicable adjustments.

A final review can help identify simple reporting errors before the information is used to prepare a tax return. Taxpayers should retain Form 1099-B and supporting investment records with their tax documents.

Common Mistakes

Common mistakes involving Form 1099-B may include entering incorrect proceeds, using incorrect cost basis information, overlooking adjustments, or failing to report applicable transactions.

Another common mistake is assuming that the information on Form 1099-B automatically represents the taxpayer’s final taxable gain or loss. Taxpayers may need additional records to account for basis adjustments, previous transactions, or other circumstances.

Related IRS Forms

Form 1099-B is commonly associated with Form 1040 and forms or schedules used to report capital gains and losses. Information from Form 1099-B may be used when reporting sales or exchanges of investments and other property.

Other forms and schedules may apply depending on the type of transaction, investment, property, gain, loss, or adjustment involved. The specific forms required will vary from one taxpayer to another.

Where to File or Submit

Form 1099-B is generally prepared by the broker, barter exchange, or other applicable reporting party and furnished to the taxpayer when required. The taxpayer generally does not submit Form 1099-B as a separate federal tax return.

When applicable, the taxpayer uses the information from Form 1099-B when preparing their federal income tax return. The taxpayer should retain the form and supporting transaction records with their tax documents.

Current IRS Form & Instructions

Tax forms and instructions may change over time. Filers and taxpayers should use the version of Form 1099-B that applies to the applicable reporting period and tax year.

The information on this page is intentionally general so it can remain useful across multiple tax years. Before preparing or using Form 1099-B, users should review the applicable version of the form and its instructions because reporting requirements, cost basis rules, transaction reporting, and other tax procedures may change.

Important Information / Disclaimer

This page is provided for general informational and educational purposes and offers a basic overview of Form 1099-B. It is not intended to provide individualized tax, legal, accounting, investment, or financial advice and should not be considered a substitute for professional guidance.

Federal tax laws, forms, information reporting requirements, capital gains rules, cost basis rules, and filing procedures may change over time. Information that applies to one taxpayer, broker, transaction, investment, or tax year may not apply to another, so users should consider their individual circumstances and seek assistance from a qualified tax professional when appropriate.