Form 8949 Example: Wash Sales, Inherited Shares, Worthless Stock

A Form 8949 example is easiest to follow with a real transaction. Say you bought 50 shares of ABC Inc. on March 15, 2025 for $5,000 and sold them on August 20, 2025 for $6,200. Your broker reported both the proceeds and the cost basis to the IRS on Form 1099-B. On Form 8949, you would check Box A at the top of Part I (short-term, basis reported) and fill in one row: “50 sh. ABC Inc.” in column (a), 03/15/2025 in column (b), 08/20/2025 in column (c), $6,200 in column (d), $5,000 in column (e), columns (f) and (g) blank, and $1,200 in column (h). That’s it. One row, one gain, one line of the return.¹

If you had held those same shares more than a year before selling, nothing changes except location: the row moves to Part II under Box D instead of Part I under Box A. The columns are identical. Form 8949 is the IRS form for listing individual sales of stocks, bonds, and other capital assets, and the totals flow to Schedule D.² The rest of this article walks through the columns, the checkboxes, and the variations you’re most likely to hit.

What Each Column Means

Every row on Form 8949 uses the same eight columns, whether the sale is short-term or long-term:

Column (a): description of the asset, such as “100 sh. XYZ Corp.”
Column (b): date you acquired the asset
Column (c): date you sold or disposed of it
Column (d): proceeds (what you received from the sale)
Column (e): cost or other basis
Column (f): adjustment code, a letter explaining why the reported gain or loss needs correcting
Column (g): adjustment amount, positive or negative, matching the code in column (f)
Column (h): gain or loss, calculated as column (d) minus column (e), plus or minus column (g)

Columns (f) and (g) stay blank for most straightforward sales. They come into play only when something about the reported basis or gain needs adjusting.

Picking the Right Checkbox

At the top of each part, you check one box that tells the IRS the reporting situation for the transactions listed below it. If you have transactions in more than one category, you fill out a separate copy of that part for each checkbox.³

For Part I (short-term, assets held one year or less):

Box A: reported on Form 1099-B with basis reported to the IRS. The most common category.
Box B: reported on Form 1099-B, but basis was not reported to the IRS. You supply the basis yourself in column (e).
Box C: not reported on any Form 1099-B, and not a digital asset.

For Part II (long-term, assets held more than one year):

Box D: reported on Form 1099-B with basis reported to the IRS.
Box E: reported on Form 1099-B, but basis was not reported.
Box F: not reported on any Form 1099-B, and not a digital asset.

The pattern is simple. A and D mean the IRS already has your basis. B and E mean the IRS has your proceeds but not your basis. C and F mean there was no 1099-B at all.¹

Your 1099-B tells you which one applies. For each transaction, the form indicates whether basis was reported to the IRS. That indicator maps directly onto the checkbox.⁴

Starting with the 2025 tax year, cryptocurrency and other digital asset transactions use their own checkboxes rather than sharing C and F. Boxes G, H, and I cover short-term digital asset sales; J, K, and L cover long-term. The logic mirrors A through F: G and J mean basis was reported, H and K mean it wasn’t, and I and L mean no Form 1099-B or Form 1099-DA was received.⁵ Form 1099-DA is the new information return brokers use for digital asset transactions.⁶

Example With a Wash Sale Adjustment

A wash sale happens when you sell a stock at a loss and then buy the same or a substantially identical one within a 61-day window: the 30 days before the sale, the day of the sale itself, and the 30 days after. Federal law disallows the loss deduction when this happens.⁷

The loss doesn’t vanish. It gets added to the basis of the replacement shares, so you eventually recognize the loss when you sell those shares (assuming you don’t trigger another wash sale). The original holding period also carries over.

Say you bought 100 shares for $10,000, sold them for $9,000 (a $1,000 loss), and repurchased the same stock 15 days later for $9,500. The row on Form 8949 looks like this:

Column (d): $9,000
Column (e): $10,000
Column (f): W
Column (g): $1,000 (a positive adjustment that cancels the loss)
Column (h): $0

The code “W” in column (f) flags this as a wash sale.⁵ Your replacement shares now carry an adjusted basis of $10,500 ($9,500 purchase price plus the $1,000 disallowed loss). When you eventually sell them cleanly, the higher basis reduces your taxable gain or grows your deductible loss.

Brokers usually flag wash sales on the 1099-B, but they can only track purchases within accounts they manage. If you repurchased in a different brokerage account or an IRA, the broker won’t catch it, and you’re still responsible for making the adjustment.

Example With Inherited or Gifted Shares

Inherited investments follow different basis rules, and the broker almost never has the right number.

Inherited Shares

When you inherit an investment, your basis is generally the fair market value of the asset on the date the original owner died, not what they originally paid.⁸ If someone bought stock decades ago for $5,000 and it was worth $45,000 the day they died, your basis is $45,000. Sell it for $50,000, and your taxable gain is only $5,000.

Your 1099-B will typically show zero or no basis. You check Box E (long-term, basis not reported) in most cases and enter the date-of-death fair market value in column (e). Inherited property is treated as long-term regardless of how long you or the decedent held it.⁹

Some estates elect an alternate valuation date, valuing assets six months after death instead of on the date of death. The election is irrevocable and available only when it decreases the overall estate tax.¹⁰ If the executor made it, your basis is the value on that alternative date instead. Check with the executor or the estate tax return (Form 706).

Gifted Shares

Property received as a gift generally takes the donor’s basis (their original cost, adjusted for stock splits and similar events). This is called carryover basis.¹¹ Your broker won’t have this information, so you check Box B or E depending on holding period and supply the basis yourself.

One wrinkle catches people. If the fair market value at the time of the gift was lower than the donor’s basis, a double basis rule applies. You use the donor’s basis for gains and the lower fair market value for losses. If you sell for an amount between the two, you report zero gain or loss. Say the donor’s basis was $5,000, the value at gift was $4,000, and you sell for $4,500. You enter $4,500 in column (d) and $5,000 in column (e), then use a negative adjustment in column (g) to arrive at $0 in column (h).

Example of a Worthless Security

If a stock or bond becomes completely worthless, you don’t just skip reporting it. The tax code treats a worthless security as sold for zero dollars on the last day of the tax year in which it became worthless.¹² You report it on Form 8949 like any other sale: December 31 as the sale date and $0 as the proceeds.¹³

Short-term or long-term depends on your holding period through that deemed December 31 sale date. Buy shares in February 2025 and they become worthless in October 2025, and the deemed sale date is December 31, 2025. That’s still one year or less from purchase, so the loss is short-term and goes in Part I.

You must claim the loss in the year the security actually became worthless, not the year you noticed or gave up. Wrong year, and the IRS can deny the deduction.

Other Adjustment Codes You Might Need

Beyond wash sales, column (f) has a full alphabet of codes for special situations. The ones individual filers hit most often:⁵

Code B: the basis shown on your 1099-B is wrong. Enter the correct basis in column (e) and use column (g) to show the difference. Common when brokers miss reinvested dividends or corporate actions.
Code E: selling expenses or option premiums not already reflected in the reported proceeds or basis. Enter as a negative adjustment in column (g).
Code D: accrued market discount on a bond. If your 1099-B shows market discount in box 1f, that amount is ordinary income and needs an adjustment.
Code Q: qualified small business stock with a Section 1202 exclusion. Enter the excluded amount as a negative in column (g).
Code S: a loss on Section 1244 small business stock that exceeds the ordinary-loss cap. The ordinary loss portion (up to $50,000, or $100,000 on a joint return) goes on Form 4797; only the excess capital loss appears on Form 8949.
Code H: home sale with an excluded gain under the home sale rules. Report in Part II and enter the excluded gain as a negative in column (g).
Code O: catch-all for adjustments not covered by any other code.

You can use multiple codes on one line. If a transaction involves both a wash sale and an incorrect basis, enter “W” and “B” together in column (f) and combine the adjustments in column (g).

When You Can Skip Form 8949

Not every sale has to be listed. You can report transactions directly on Schedule D (line 1a for short-term, line 8a for long-term) when all of the following are true for those sales:³

Your Form 1099-B shows that the broker sent your cost basis to the IRS.
No adjustments are needed, meaning no wash sale disallowances, accrued market discount, or other corrections in boxes 1f or 1g.
The short-term or long-term classification on the 1099-B is correct.
You aren’t deferring gain through a Qualified Opportunity Fund.

If every transaction you made during the year meets those conditions, you add up all the proceeds and all the basis figures from your 1099-Bs and enter the totals straight on Schedule D. Most people with active brokerage accounts still need Form 8949 for at least some sales, but this shortcut is real when the year lines up cleanly.

Where the Totals Go

Once every transaction is listed with the correct checkbox, columns, and codes, you total each part. Part I totals flow to Schedule D based on the checkbox used: Box A totals to line 1b, Box B totals to line 2, Box C totals to line 3. Part II totals follow the same pattern: Box D to line 8b, Box E to line 9, Box F to line 10.¹

Schedule D nets everything together. Line 7 combines short-term results, line 15 combines long-term, and line 16 adds them for your overall net capital gain or loss. A gain on line 16 goes to Form 1040, line 7. A net loss also goes to Form 1040, line 7, but only up to the deductible cap ($3,000, or $1,500 if married filing separately).¹⁴ The short-term versus long-term split still matters at that point, because long-term gains are taxed at 0%, 15%, or 20% depending on your income while short-term gains are taxed as ordinary income.⁹

1
Internal Revenue Service. Form 8949 – Sales and Other Dispositions of Capital Assets
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Internal Revenue Service. About Form 8949 – Sales and Other Dispositions of Capital Assets
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Internal Revenue Service. Instructions for Form 8949
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Internal Revenue Service. Stocks (Options, Splits, Traders) 1
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Internal Revenue Service. Instructions for Form 8949 – Sales and Other Dispositions of Capital Assets
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Internal Revenue Service. Treasury, IRS Issue Proposed Regulations to Make It Easier for Digital Asset Brokers to Provide 1099-DA Statements Electronically
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Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities
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Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
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Internal Revenue Service. Topic No. 409 – Capital Gains and Losses
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Office of the Law Revision Counsel. 26 US Code 2032 – Alternate Valuation
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Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust
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Office of the Law Revision Counsel. 26 USC 165 – Losses
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Internal Revenue Service. Losses (Homes, Stocks, Other Property) 1
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Internal Revenue Service. Schedule D Form 1040 – Capital Gains and Losses