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Form 1099-B is a reporting form, in the 1099 series, used primarily to report the sale of stocks by a taxpayer.

These “glossary” entry posts are intended to be brief snapshots of an issue, so in this post I’ll be focusing on the most basic situations with Form 1099-B.

Let’s talk about what Form 1099-B will show with a stock sale.

Covered Security

A “covered” security means the issuer of the 1099-B (the brokerage, for example) is responsible for keeping track of the taxpayer’s basis in the stock. The 1099-B will show:

  • A description of what was sold (i.e. “100 shares of IBM stock”)
  • The date the stock was acquired
  • The date the stock was sold
  • Amount received from the sale of the stock
  • The taxpayer’s basis in the stock

Non-Covered Security

A non-covered security means the issuer of the 1099-B is NOT responsible for keeping track of the taxpayer’s basis in the stock. (BUT — many times the brokerage will show this information if they have it; non-covered simply means they’re not “required” to keep track of it.)

In this case, the 1099-B will show:

  • A description of what was sold
  • The date the stock was acquired
  • The date the stock was sold
  • Amount received from the sale of the stock
  • SOMETIMES: the taxpayer’s basis in the stock

NOTE: there is supposed to be one 1099-B for each sale of stock. In practice, what happens is the brokerage will issue a statement, called a Form 1099-B but laid out much differently from the “official” version of the 1099-B, which will show all of the above information for each stock sale.

Reporting by the Recipient

What to do with a 1099-B? This is a topic to delve into deeper in a separate post, but here’s a basic overview.

  • If reporting only covered transactions and you are not making any adjustments to your cost basis, you can report totals directly on Schedule D
  • If reporting non-covered transactions or you have adjustments to basis on covered transactions, you are supposed to itemize each stock sale on Form 8949, which feeds into Schedule D
  • There is a way you can summarize multiple transactions on Form 8949 while attaching a summary sheet to the IRS, rather than itemizing every single stock sale on the 8949. I’ll talk more about this in a future post.

For more tax terms broken down into simpler terms, visit the Glossary page on this site.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”