Form 1099-B is the tax document a broker or barter exchange sends after you sell stocks, bonds, mutual funds, options, or similar assets during the year. It reports what you sold, when you bought and sold it, how much you received, and, in most cases, what you paid for it. Your broker files an identical copy with the IRS, so the agency already knows the numbers before your return arrives. The job on your end is transferring those figures correctly to Form 8949 and Schedule D, and handling the places where the broker’s data is incomplete or wrong.
Who Sends You a 1099-B
Brokers, custodians, and barter exchanges must file a 1099-B for each person who sold securities, commodities, regulated futures contracts, options, or similar assets for cash during the year. The form also covers cash or property you received from a corporation that changed ownership or capital structure, plus property or services exchanged through a barter exchange.1Internal Revenue Service. About Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
Sales inside IRAs, 401(k)s, and other tax-advantaged retirement accounts do not generate a 1099-B. Those accounts grow tax-deferred or, for Roth accounts, tax-free, so individual trades inside them are not reported transaction by transaction. You only get a tax form for a retirement account when you take a distribution.
Starting with the 2025 tax year, digital asset sales handled by a broker move to a new Form 1099-DA instead of Form 1099-B.2Internal Revenue Service. Digital Assets For 2026 sales, brokers also have to report cost basis on those digital asset transactions, which was not required for 2025.3Internal Revenue Service. Final Regulations and Related IRS Guidance for Reporting by Brokers on Sales and Exchanges of Digital Assets If you sold cryptocurrency through a broker, look for a 1099-DA. Those transactions flow to Form 8949 using new checkbox categories G through L.4Internal Revenue Service. Form 8949, Sales and Other Dispositions of Capital Assets
The Boxes That Drive Your Tax
The form has more than a dozen numbered boxes, but the ones that matter for a typical investor cluster in a small range.5Internal Revenue Service. Instructions for Form 1099-B (2026)
Boxes 1a Through 1e
These five boxes contain the core data for every sale.
- Box 1a describes what was sold, such as “100 sh. XYZ Co.” It is a description, not a dollar amount.
- Box 1b is the date you originally acquired the asset. Combined with Box 1c, it determines whether the gain or loss is short-term or long-term.
- Box 1c is the date the sale took place.
- Box 1d is the gross proceeds you received, before any reduction for commissions or fees.
- Box 1e is your cost basis, which typically reflects what you originally paid plus adjustments for things like reinvested dividends or stock splits.
Your capital gain or loss for each line equals Box 1d minus Box 1e. If Box 1e is blank, the asset is usually a noncovered security and the broker was not required to track its basis.6Internal Revenue Service. Form 1099-B (2026 Draft)
Box 1f: Accrued Market Discount
Box 1f applies when you bought a bond below face value and later sold it or received a principal payment. The discount that accrued while you held the bond gets treated as ordinary interest income rather than capital gain. If Box 1f has an amount, you report that portion as interest and reduce the gain on Form 8949 by the same amount.
Box 1g: Wash Sale Loss Disallowed
Box 1g shows the portion of a loss the IRS will not let you deduct because of the wash sale rule. A wash sale happens when you sell a security at a loss and buy a substantially identical security within 30 days before or after that sale.7Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The disallowed loss is not gone. It gets added to the basis of the replacement shares, deferring the tax benefit until you eventually sell those shares without triggering another wash sale.8Internal Revenue Service. Form 1099-B (Accessible Version)
Box 2: Short-Term, Long-Term, or Ordinary
Box 2 tells you whether the transaction produced a short-term gain or loss, a long-term gain or loss, or ordinary income. Short-term means the asset was held for one year or less. Long-term means it was held for more than one year.9Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses Long-term gains qualify for lower tax rates. Short-term gains are taxed at your ordinary income rate.10Internal Revenue Service. Topic No. 409, Capital Gains and Losses The difference can be large: holding a position one extra day past the one-year mark can shift the rate from as high as 37% down to 20% or below. If Box 2 says “Ordinary,” the sale produced ordinary income or loss rather than capital gain, which can happen with certain debt instruments.
Box 4: Federal Income Tax Withheld
Most investors see nothing here. Box 4 only shows an amount when the broker was required to perform backup withholding at a flat 24%, which applies if you did not provide a correct taxpayer identification number, the IRS notified the broker your TIN was wrong, or you previously underreported interest and dividends.11Internal Revenue Service. Topic No. 307, Backup Withholding Any amount in Box 4 counts as a tax payment on your return.
Box 5: Noncovered Security
When Box 5 is checked, the asset is a noncovered security and the broker was not required to report its cost basis to the IRS.12Internal Revenue Service. Stocks (Options, Splits, Traders) 1 Box 1e may be blank in that case, and figuring out the right basis is on you. For most stocks, shares acquired on or after January 1, 2011 are covered; for mutual funds and dividend reinvestment plans, the cutoff is January 1, 2012.13Internal Revenue Service. IRS Notice 2009-17, Reporting of Customers Basis in Securities Transactions
If you are selling assets held for many years and Box 5 is checked, dig up the original purchase confirmations or brokerage statements before you file. Reporting no basis at all lets the IRS treat the entire sale proceeds as taxable gain.
Boxes 8 Through 11: Section 1256 Contracts
These boxes appear only if you traded regulated futures, foreign currency contracts, or certain options classified as Section 1256 contracts. Those positions are marked to market at year-end, so you owe tax on realized gains from closed positions and on unrealized gains from positions still open on December 31.
- Box 8: profit or loss on contracts closed during the year.
- Box 9: unrealized profit or loss on open contracts at the prior year-end.
- Box 10: unrealized profit or loss on open contracts at the current year-end.
- Box 11: aggregate profit or loss.
Section 1256 contracts get a 60/40 split regardless of holding period: 60% of net gain is taxed at long-term rates, 40% at short-term rates. You report the amounts on Form 6781 instead of directly on Form 8949, and the totals flow from there to Schedule D.
How the Numbers Get to Your Return
Nothing from a 1099-B goes straight onto Form 1040. It first passes through Form 8949, which acts as a line-by-line ledger of every capital transaction, then rolls up onto Schedule D.14Internal Revenue Service. Instructions for Form 8949 (2025)
Form 8949 splits into Part I for short-term transactions and Part II for long-term. In each part, you check the box that matches your situation:
- Box A (short-term) or D (long-term): basis was reported to the IRS on your 1099-B.
- Box B (short-term) or E (long-term): basis was not reported to the IRS, meaning Box 5 was checked.
- Box C (short-term) or F (long-term): the sale was not reported on a 1099-B at all.
For each transaction you enter the description from Box 1a, the dates from 1b and 1c, the proceeds from 1d, and the basis from 1e. Adjustments go in Column (g) with a letter code. Form 8949 calculates the gain or loss per line, the totals move to Schedule D, and Schedule D’s net short-term and net long-term figures flow to your 1040.4Internal Revenue Service. Form 8949, Sales and Other Dispositions of Capital Assets
Adjustments You May Have to Make
The 1099-B is a starting point, not the final answer. Several common situations require corrections before you file.
Missing basis on a noncovered security. If Box 5 is checked and Box 1e is blank, look up your original purchase price and enter it on Form 8949. Leaving it blank means the IRS treats the full proceeds as gain.
Wash sale losses. If Box 1g shows a disallowed amount, enter it in Column (g) of Form 8949 using adjustment code “W.” The disallowed portion reduces your deductible loss and gets added to the basis of the replacement shares.
Gifted or inherited assets. When you sell stock received as a gift, the broker often has no way to know the donor’s original basis, so what appears on the 1099-B may be wrong or blank. Gifts generally carry over the donor’s original basis. Inherited assets typically get a stepped-up basis equal to fair market value on the date of death. You may need to override the broker’s figure on Form 8949.
Accrued market discount. If Box 1f has an amount, report that portion as interest income and reduce the Form 8949 capital gain by the same amount. The Form 8949 instructions include a worksheet for the adjustment.
Corrected 1099-B. If a corrected form arrives after you have filed and the change affects your gain or loss, you may need to file Form 1040-X to amend.15Internal Revenue Service. File an Amended Return If you know a correction is on the way, wait to file.
What Happens If You Skip It
Because the IRS gets the same 1099-B your broker sends you, unreported proceeds are caught by automated matching. If the omission produces a substantial understatement of tax, the IRS can impose an accuracy-related penalty of 20% of the underpayment. For individuals, a substantial understatement means the unreported amount exceeds the greater of 10% of the tax that should have been shown or $5,000.16Internal Revenue Service. Accuracy-Related Penalty The same 20% penalty can apply for negligence even without a substantial understatement.
If the unreported income leaves you owing tax and you also missed the filing deadline, the failure-to-file penalty runs 5% of the unpaid tax per month, up to 25%. For returns due after December 31, 2025, filing more than 60 days late triggers a minimum penalty of $525 or 100% of the unpaid tax, whichever is less.17Internal Revenue Service. Failure to File Penalty Interest runs on top of the penalties from the original due date.
Report every transaction on your 1099-B, even if the basis looks wrong. File with your best information and amend later if a correction shows up.