Image courtesy of Pixabay.com

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.