How to Report 1099-B on Your Tax Return: Form 8949 and Schedule D

To report a 1099-B on your tax return, list each sale on Form 8949, sorted by holding period and whether your broker reported cost basis to the IRS, then carry the subtotals to Schedule D and let the net capital gain or loss flow to Form 1040, Line 7a. If every sale on your 1099-B is a covered security with basis reported and no adjustments, you can skip Form 8949 and enter the totals straight on Schedule D. Everything else on the return depends on getting the sort right first.

Start by Reading the 1099-B

Your broker sends a 1099-B for every sale of a security during the calendar year. The boxes you care about are the description (1a), acquisition date (1b), sale date (1c), proceeds (1d), and cost basis (1e) for covered securities.¹ If you sold through more than one brokerage, expect a separate 1099-B from each.

Three pieces of information on the form drive every reporting choice you’ll make.

Cost Basis

Cost basis is what you originally paid, including purchase commissions and fees. Proceeds minus basis is your gain or loss. If the basis is missing or wrong, the full sale price can be treated as gain, so this number is worth the effort to get right.

For mutual fund shares bought at different prices over time, you can elect the average cost method: total cost of all shares owned, divided by total shares, times shares sold.² Averaging isn’t available for individual stocks.

Covered vs. Non-Covered

Box 3 marks whether the security is covered. A covered security is one where the broker tracked your basis and reported it to the IRS. For most stocks, that means shares bought after January 1, 2011; mutual fund shares and shares from dividend reinvestment plans became covered after 2011 or 2012 depending on type.³

For non-covered securities, the broker doesn’t report basis to the IRS, and the responsibility falls on you. Old purchase confirmations, account statements, and transfer records are the usual sources. If you can’t establish basis, the IRS treats it as zero and taxes the full proceeds. This is where filers most often overpay.

Holding Period

Time held before sale sets the tax rate. Held one year or less: short-term, taxed at ordinary rates up to 37% for 2026.⁴ Held more than one year: long-term, taxed at 0%, 15%, or 20% depending on income.⁵ For 2026, the 20% rate begins at $545,500 of taxable income for single filers and $613,700 for joint filers.

Sort Every Transaction Into One of Four Buckets

Before you touch Form 8949, group your sales into: short-term covered, short-term non-covered, long-term covered, and long-term non-covered. The bucket determines which box you check at the top of Form 8949, which in turn tells the IRS how much of the data on the return should match what it already has from your broker.

Fill In Form 8949

Form 8949 has two parts: Part I for short-term, Part II for long-term. Within each part you check a box (A through F for traditional securities, G through L for digital assets) based on whether basis was reported and whether you’re making adjustments.⁶

Covered Transactions With No Adjustments (Boxes A and D)

These are the simplest rows. Short-term covered goes in Part I with Box A checked; long-term covered goes in Part II with Box D checked. Enter proceeds from Box 1d in Column (d) and basis from Box 1e in Column (e). Leave Column (g) blank. Column (h) is the difference.

Non-Covered Transactions (Boxes B, C, E, F)

If your broker didn’t report basis to the IRS, use Box B (short-term) or Box E (long-term) and enter the basis you calculated in Column (e). Boxes C and F cover situations where basis was reported to the IRS but needs adjustment, or where some other correction to the gain or loss is required.

Transfers between brokerages are the classic trap. The receiving broker sometimes loses the basis and marks the shares as non-covered. Dig up the original purchase records before you file; the gap between accurate basis and a zero default can run to thousands in unnecessary tax.

When You Can Skip Form 8949 Entirely

If every transaction on your 1099-B shows basis reported to the IRS, has no wash sale or accrued market discount adjustments, and needs no other correction, you can enter the totals directly on Schedule D, Line 1a (short-term) or Line 8a (long-term), and skip Form 8949 for those sales.⁶ Most tax software makes this choice for you.

Common Adjustment Codes

When something needs correcting, put a code in Column (f) and the adjustment amount in Column (g).

Wash Sales (Code W)

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 sale, a 61-day window in total.⁷ The disallowed loss is added to the basis of the replacement shares, so the deduction is deferred rather than lost. Brokers flag wash sales in Box 1g. Enter Code W in Column (f) and the disallowed loss as a positive number in Column (g), which reduces or zeroes the loss in Column (h).⁸

Incorrect Basis (Code B)

Use Code B when the broker reported basis to the IRS but the amount in Box 1e is wrong. For covered rows (Boxes A or D), leave the broker’s number in Column (e) and put the correction in Column (g): negative (in parentheses) if the correct basis is higher, positive if lower.⁹ For non-covered rows (Boxes B or E), you can enter the correct basis directly in Column (e) and put zero in Column (g).

Nondeductible Losses (Code L)

Code L applies to losses that aren’t deductible, such as losses on personal-use property that ended up on a 1099-B. Enter the nondeductible amount as a positive number in Column (g) so it offsets the loss.⁹

Carry the Totals to Schedule D and Form 1040

Once Form 8949 is done, the subtotals flow to Schedule D. Box A totals land on Line 1b; Boxes B and C on Lines 2 and 3. Box D totals go on Line 8b; Boxes E and F on Lines 9 and 10.¹⁰ Schedule D nets the short-term and long-term results and sends the final number to Form 1040, Line 7a.

Situations That Change the Standard Treatment

Collectibles

Long-term gains on art, antiques, precious metals, gems, stamps, and coins are taxed at a maximum 28% rate rather than the standard long-term rates.⁵ Report the sale on Form 8949 like any other long-term transaction, then complete the 28% Rate Gain Worksheet in the Schedule D instructions and enter the result on Schedule D, Line 18.¹¹

Inherited Securities

Inherited stock takes a stepped-up (or stepped-down) basis equal to fair market value on the date of death.¹² If the estate elected the alternate valuation date, basis is the value six months later. The sale is always long-term regardless of how briefly you held the shares, so it goes in Part II of Form 8949. If the broker’s basis is wrong, correct it with Code B. Confirm the stepped-up value with the executor or the institution holding the account before selling.

Worthless Securities

A security that becomes completely worthless is treated as sold for $0 on the last day of the tax year. The holding period runs from your original purchase, and you report the loss on the appropriate part of Form 8949.¹³

Section 1244 Small Business Stock

If you were the original purchaser of stock in a qualifying small business and the shares lost value, part of the loss can be deducted as ordinary rather than capital, and it isn’t held back by the $3,000 annual capital loss cap. The ordinary loss limit is $50,000 per year, or $100,000 on a joint return.¹⁴

Digital Assets and Form 1099-DA

For sales made after December 31, 2025, brokers must report digital asset transactions on Form 1099-DA. Gross proceeds are reported for every sale; basis is reported for digital assets that qualify as covered securities. For non-covered digital assets, basis reporting is voluntary, so you’ll often still need to track it yourself.¹⁵

Only two basis methods are accepted for digital assets: first-in, first-out (the default) and specific identification. Specific identification requires you to designate the units before the transaction and keep records of the selection.¹⁶ LIFO, HIFO, and average cost are not accepted. Digital asset transactions use Boxes G through L on Form 8949 (the digital-asset counterparts to A through F) and flow to Schedule D the same way traditional securities do.⁶

The 3.8% Net Investment Income Tax

Capital gains can trigger an extra 3.8% Net Investment Income Tax if your modified adjusted gross income clears a threshold. The thresholds are statutory and not indexed to inflation:

$250,000 for married filing jointly or qualifying surviving spouse
$200,000 for single or head of household
$125,000 for married filing separately

The 3.8% applies to the lesser of net investment income or the amount your modified AGI exceeds the threshold. Calculate it on Form 8960 and include it with your return.¹⁷ For high earners, this surtax effectively raises the top long-term capital gains rate to 23.8%.

Capital Loss Limits and Carryforwards

If losses exceed gains for the year, you can deduct up to $3,000 of the net loss against ordinary income ($1,500 if married filing separately).⁵ Schedule D, Line 21 computes the limit.¹⁰ Anything beyond that carries forward indefinitely. Next year, you use the Capital Loss Carryover Worksheet in the Schedule D instructions to figure the amount coming into that year’s return.¹¹ Keep the loss-year Schedule D and Form 1040, because the calculation needs numbers from both.

If the IRS Sends a CP2000

When the numbers on your return don’t line up with what your broker reported, the Automated Underreporter system generates a CP2000 notice proposing an adjustment. It isn’t a bill, but ignoring it leads to a Statutory Notice of Deficiency.¹⁸ You have 30 days to respond, or 60 if you live outside the United States. Compare the IRS figures to your return and 1099-B. If the notice is right, sign and return the Response form; if not, send a signed explanation with supporting documents through the IRS Document Upload Tool, fax, or mail.

The most common cause is missing cost basis. The broker reports $10,000 in proceeds, you forgot to enter the $8,000 basis, and the IRS sees $10,000 of untaxed gain. Documentation of the actual basis usually resolves it with no additional tax. If the notice is correct but you also have other unreported items to add, file Form 1040-X for that year, write “CP2000” at the top, and include it with your response.

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