Form 8949 Exception Reporting Statement: Rules and Limits

Form 8949 exception reporting gives you two ways to avoid listing every stock, fund, or digital asset sale on its own row. Exception 1 lets you skip Form 8949 entirely and put totals directly on Schedule D. Exception 2 keeps you on Form 8949 but lets you enter one summary line per broker with a detailed statement attached. Both are limited to transactions that meet specific conditions, and any sale that fails those conditions has to be reported individually.¹

Exception 1: Reporting Totals Straight on Schedule D

Exception 1 is the shortest path. Qualifying transactions are aggregated and entered on Schedule D line 1a (short-term) or line 8a (long-term). No Form 8949, no attached statement.¹

Every transaction in the group has to meet all of these conditions:

Your broker sent a Form 1099-B (or Form 1099-DA for digital assets) showing that cost basis was reported to the IRS.
The 1099-B shows no adjustments in box 1f or 1g (or box 1h or 1i on a 1099-DA).
The “Ordinary” checkbox in box 2 of the 1099-B (or box 6 on a 1099-DA) is not checked.
You don’t need to change the basis, the type of gain or loss, or any other figure the broker reported.
You aren’t deferring or terminating gain tied to a Qualified Opportunity Fund investment.
The sale doesn’t involve collectibles such as coins, art, or precious metals.

If any single sale fails one of those conditions, pull it out and report it individually on Form 8949. The rest of the group can still use Exception 1.¹

On each Schedule D summary line, subtract total basis in column (e) from total proceeds in column (d) and put the result in column (h). For a taxpayer with one brokerage account and routine covered-security sales, that’s usually the whole job.

Exception 2: The Attached Statement Method

Exception 2 is broader. It works for any category of transactions, including noncovered securities, provided you attach a statement that carries the same detail Form 8949 would require: description of the asset, acquisition date, sale date, proceeds, basis, any adjustment codes, and gain or loss. The statement has to be formatted like Form 8949. A broker’s consolidated 1099-B supplement usually satisfies this, but check that every required field is actually on it.¹

Filling Out the Summary Row

Each group covered by a single attached statement gets one row in the appropriate Part of Form 8949:

Column (a): the broker’s name followed by “see attached statement.”
Columns (b) and (c): blank.
Column (d): total proceeds for the group.
Column (e): total cost or other basis for the same transactions.
Column (f): code “M” to signal multiple transactions on one row, plus any other adjustment codes that apply.
Columns (g) and (h): total adjustments and net gain or loss.

Check the box at the top of the Part that matches the group. Short-term covered securities use Box A (Box G for digital assets). Long-term covered securities use Box D (Box J for digital assets). Noncovered securities use Box B/H or Box E/K, and transactions with no 1099-B at all use Box C/I or Box F/L.¹

More Than One Broker

Statements from separate brokers get separate rows. Don’t combine brokers on one line. Each row references the specific statement it belongs to.¹

Using Both Exceptions on the Same Return

You can. Transactions that qualify for Exception 1 go straight to Schedule D line 1a or 8a. Anything that doesn’t qualify but has a compliant statement behind it can go on Form 8949 under Exception 2.

Transactions You Can’t Summarize

Some sales have to be listed on their own row with an adjustment code in column (f), regardless of which exception you were hoping to use.

Wash Sales

A wash sale happens when you sell a security at a loss and buy a substantially identical one within 30 days before or after. The loss is disallowed and added to the basis of the replacement shares.² Report the sale with code “W” in column (f) and the nondeductible loss as a positive number in column (g). If the 1099-B already shows a wash sale adjustment in box 1g but the amount is wrong, enter the correct figure.³

One thing to watch: brokers only track wash sales within the same account for identical securities. Sell at a loss in one account and rebuy in another within the window, and no one flags it for you. You’re on the hook to identify the wash sale, report code W, and adjust the replacement shares’ basis yourself.

Wrong Basis on the 1099-B

If the basis your broker reported to the IRS is incorrect, use code “B” in column (f) and enter the right basis in column (e). This comes up often with inherited or gifted shares and with stock received in corporate reorganizations where the broker didn’t have full records.³

Collectibles

Net gains on collectibles like coins, art, antiques, and precious metals are taxed at a maximum rate of 28%, above the standard long-term rates of 15% or 20%.⁴ Report each sale individually with code “C” in column (f). Exception 1 is off the table for collectibles even when the broker reported basis.

Other Codes That Force Individual Reporting

Selling expenses or option premiums not already reflected on the 1099-B use code E. A sale of your main home with an exclusion uses code H. Gains deferred through a Qualified Opportunity Fund investment use code Z. Each of those transactions gets its own row.³

Covered Versus Noncovered Securities

Whether a security is covered controls which exception you can use. A covered security is one the broker is legally required to track basis for and report on Form 1099-B, including whether the gain or loss is short-term or long-term.⁵

Noncovered securities can never use Exception 1, because there’s no third-party basis figure for the IRS to match against. You can still use Exception 2 for them, but you’ll check Box B or Box E (or the digital-asset equivalents) rather than Box A or Box D, and the attached statement has to carry accurate basis you compiled yourself.¹

Keeping Short-Term and Long-Term Separate

Form 8949 splits into Part I for short-term sales (held one year or less) and Part II for long-term sales (held more than one year). Short-term net gains are taxed as ordinary income; long-term net gains generally get 0%, 15%, or 20% rates depending on taxable income.⁴

Whichever exception you use, keep the holding periods apart. Exception 1 short-term totals go on Schedule D line 1a and long-term on line 8a. Exception 2 needs its own summary row for each holding period and box category. Mixing them on one line will misstate the tax and almost always triggers an IRS notice.

Digital Assets Beginning in 2026

Brokers must report digital asset sales on Form 1099-DA for transactions starting in 2026, and the Form 8949 instructions now cover digital assets alongside traditional securities. Digital assets acquired after 2025 for cash are treated as covered securities, so the broker has to report basis to the IRS.

The 2025 Form 8949 already carries Boxes G through L for digital asset transactions, mirroring Boxes A through F. Exception 1 works the same way here: if the 1099-DA shows basis was reported, no adjustments appear, and the ordinary-income box isn’t checked, the totals can go directly on Schedule D lines 1a or 8a.¹ Digital assets acquired before 2026 remain noncovered, so those sales still go on Form 8949, either individually or through Exception 2 with the noncovered box checked.

What Happens If You Get the Reporting Wrong

The IRS matches your return against 1099-B and 1099-DA data. When Schedule D totals don’t line up with what brokers filed, a CP2000 notice proposing additional tax typically follows.

If the mismatch produces an underpayment, the accuracy-related penalty is 20% of the tax you should have paid. The IRS applies it for negligence or for a substantial understatement of income tax, which for individuals means understating tax by the greater of 10% of the correct tax or $5,000.⁶

One shortcut worth naming so you don’t try it: the instructions are explicit that you cannot enter “Available upon request” with summary totals in place of the actual transaction detail on Form 8949 or on an attached statement. Doing that leaves the return incomplete.¹

1
Internal Revenue Service. Instructions for Form 8949
2
Office of the Law Revision Counsel. 26 US Code 1091 – Loss From Wash Sales of Stock or Securities
3
Internal Revenue Service. Instructions for Form 8949
4
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
5
Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers
6
Internal Revenue Service. Accuracy-Related Penalty