To file Form 1099-B, a broker or barter exchange completes one form for each customer sale of stocks, bonds, mutual funds, commodities, options, or other reportable securities, then delivers Copy B to the customer by February 15 and files Copy A with the IRS by February 28 on paper or March 31 electronically. If you received a 1099-B rather than issued one, you use its figures to complete Form 8949 and Schedule D with your Form 1040. The mechanics below cover both sides.
Who Has to File
Under 26 U.S.C. § 6045, anyone doing business as a broker must file a return for each customer showing name, address, gross proceeds, and other required details.1Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers The statute reaches dealers, barter exchanges, and anyone who regularly acts as a middleman for property or services, which in practice means online brokerages, mutual fund companies, and entities that regularly redeem their own stock or retire their own debt.
Reportable transactions include sales of corporate stock, debt instruments, commodities, regulated futures contracts, foreign currency contracts, forward contracts, options, and securities futures contracts.2Internal Revenue Service. About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions Barter exchanges file when they facilitate exchanges of property or services between members.
Some recipients are exempt. You do not issue a 1099-B to corporations, tax-exempt organizations, or government units; their activity is tracked through other channels.3eCFR. 26 CFR 1.6045-3 – Information Reporting for an Acquisition of Control or a Substantial Change in Capital Structure
Before You Start: Covered vs. Noncovered Securities
Whether a security is “covered” decides how much basis information you must report to the IRS. For a covered security, the broker reports cost basis on Copy A. For a noncovered security, basis on Copy B is informational to the customer only, and the customer is responsible for the figure they put on Form 8949.
The cutoffs come from 26 U.S.C. § 6045(g) and 26 CFR § 1.6045-1 and phase in by asset type:4eCFR. 26 CFR 1.6045-1 – Returns of Information of Brokers and Barter Exchanges
- Individual stocks acquired on or after January 1, 2011
- Mutual fund shares and dividend reinvestment plan stock acquired on or after January 1, 2012
- Less complex bonds and most options acquired on or after January 1, 2014
- More complex bonds acquired on or after January 1, 2016
- Digital assets acquired on or after January 1, 2023
On the form, check Box 5 to flag a noncovered security. When Box 5 is checked, the broker is not required to complete Boxes 1b, 1e, 1f, 1g, or 2, and there is no penalty for errors in those fields even if the broker chooses to fill them in.5Internal Revenue Service. Instructions for Form 1099-B
Filling In the Boxes
A single 1099-B cannot combine short-term and long-term sales; issue separate forms when a customer’s transaction covers both.
Boxes 1a–1d: The Sale Itself
Box 1a, Description of Property. For stocks, list the issuer name, number of shares, and class (common, preferred). For options, identify the underlier and number of shares covered. Regulated futures contracts are entered as “RFC” or a similar abbreviation. For a bartering transaction, describe the service or property exchanged.
Box 1b, Date Acquired. The acquisition date of the securities sold; leave blank if shares came from multiple acquisition dates. This date drives the short-term or long-term holding-period classification.
Box 1c, Date Sold or Disposed. Trade date for broker transactions. For barter exchanges, the date cash or property was actually or constructively received.
Box 1d, Proceeds. Gross cash proceeds reduced by commissions and transfer taxes. A loss, such as from closing a written option, goes in parentheses as a negative. Do not include amounts from Boxes 8 through 11 here.
Boxes 1e–1g: Basis and Adjustments
Box 1e, Cost or Other Basis. The customer’s original cost, adjusted for stock splits, return-of-capital distributions, and reinvested dividends. Required for covered securities.
Box 1f, Accrued Market Discount. For debt instruments bought below face value. Accrued discount is ordinary income and taxed at regular rates.
Box 1g, Wash Sale Loss Disallowed. If the customer sold at a loss and bought a substantially identical security within 30 days before or after, the loss is disallowed under section 1091. Enter the disallowed amount here; the customer will add it to the basis of the replacement shares rather than deducting it now.
Box 2: Type of Gain or Loss
Mark short-term, long-term, or ordinary. The “Ordinary” indicator applies when part of a gain may be ordinary income, such as certain section 988 foreign currency transactions.5Internal Revenue Service. Instructions for Form 1099-B
Box 4: Federal Income Tax Withheld
Enter backup withholding here. If a customer failed to furnish a valid TIN or the IRS notified you that backup withholding applies, withhold 24 percent of proceeds and report the amount in Box 4.
Boxes 8–11: Section 1256 Contracts
Report profit or loss on regulated futures contracts, foreign currency contracts, and Section 1256 option contracts in Boxes 8, 9, and 10. The net figure goes in Box 11 as the aggregate profit or loss for the year. Customers move Box 11 to Form 6781 rather than Form 8949.
Other Identifiers
Include the CUSIP number, the nine-character identifier for North American financial instruments, to specify the exact security sold. Barter transactions use the Box 1a description in place of a CUSIP.
Preparing Copy A for Submission
Start with the payer’s legal name, address, and federal TIN, and match the recipient’s identifying details. Verify the recipient’s TIN before filing. An incorrect TIN produces a B-notice from the IRS and can force you to begin backup withholding at 24 percent on that customer’s future payments.
Copy A must be the official IRS version or a version printed by IRS-approved software. Photocopies of Copy A are not accepted; the IRS processes them with optical scanners that cannot read standard photocopies.5Internal Revenue Service. Instructions for Form 1099-B Copies B, C, and other recipient copies can go on plain paper, or by electronic delivery with the recipient’s consent.
The most error-prone field is cost basis, particularly for securities transferred in from another firm or acquired through mergers, spinoffs, or splits. When a position transfers in, you rely on the section 6045A transfer statement from the delivering broker. If that statement was incomplete, the basis on your 1099-B may be wrong, and the customer will need to correct it on Form 8949.
Deadlines and How to Submit
Copy B must reach the recipient by February 15 of the year after the transaction, a later date than most 1099 forms to give brokers time for basis adjustments.5Internal Revenue Service. Instructions for Form 1099-B Copy A is due to the IRS by February 28 on paper or March 31 electronically.
Electronic Filing Is Required at Ten Returns
Any filer submitting ten or more information returns in a calendar year must file electronically.6Internal Revenue Service. Who Must File Information Returns Electronically The threshold counts across almost all information return types combined, not ten of each type.
For tax year 2025 returns filed in early 2026, the Filing Information Returns Electronically (FIRE) system remains open. The IRS has announced that FIRE will be retired after tax year 2026, and starting with filing season 2027 the Information Returns Intake System (IRIS) will be the sole electronic intake channel.7Internal Revenue Service. Filing Information Returns Electronically (FIRE) If you have not tested IRIS yet, begin now rather than during the changeover.
Extensions
File Form 8809 by the original due date for an automatic 30-day extension. For most 1099 forms, excluding W-2 and 1099-NEC, you can request a second 30-day extension on paper before the first one expires by checking Box 7 and explaining the hardship. Form 8809 can be submitted through the IRIS portal or the FIRE system.
Combined Federal/State Filing
Form 1099-B is eligible for the Combined Federal/State Filing Program. The IRS forwards electronically filed returns to participating states at no cost, so you don’t file separately with each state.8Internal Revenue Service. FIRE System Test Files and Combined Federal/State Filing (CF/SF) Program Participation requires submitting an electronic test file coded for the program. Some participating states still want separate notification, so confirm with each state.
If You Received a 1099-B: Reporting on Your Return
The path runs Form 1099-B to Form 8949 to Schedule D to Form 1040.
Sort Transactions on Form 8949
Form 8949 has Part I for short-term (held one year or less) and Part II for long-term (held more than one year). Within each part, check the box that matches what the broker reported:9Internal Revenue Service. Instructions for Form 8949
- Box A (short-term) or Box D (long-term): basis was reported to the IRS. Covered securities.
- Box B or Box E: basis was not reported to the IRS. Noncovered securities where Box 5 is checked.
- Box C or Box F: no 1099-B was received for the transaction.
For each sale, enter the description from Box 1a, the acquired date from Box 1b, the sale date from Box 1c, proceeds from Box 1d, and cost basis from Box 1e. If basis was reported correctly and no adjustments are needed, many Box A and Box D transactions can be reported in aggregate directly on Schedule D lines 1a and 8a without listing each sale.10Internal Revenue Service. Instructions for Schedule D (Form 1040)
Enter Adjustments
Column (g) on Form 8949 is where adjustments go, each with a letter code. The most common is code W for wash sales. If Box 1g on your 1099-B shows a disallowed loss, enter that amount as a positive number in column (g) with code W. The disallowed amount adds to the basis of the replacement shares.9Internal Revenue Service. Instructions for Form 8949
Other adjustments come up when basis on the 1099-B is wrong, which happens routinely with inherited stock, gifted shares, or securities transferred between brokerages. Enter the correct basis in column (e) and record the adjustment amount and code in columns (f) and (g).
Carry Totals to Schedule D
Form 8949 totals flow to Schedule D. Part I combines short-term amounts, Part II combines long-term, and Schedule D nets them. A net capital loss is deductible against ordinary income up to $3,000 ($1,500 if married filing separately), with any excess carried forward. The final figure lands on Form 1040, line 16.
Digital Assets Are Moving to Form 1099-DA
Cryptocurrency and other digital asset sales are shifting off Form 1099-B. Final regulations require brokers to report digital asset sales on the new Form 1099-DA for transactions on or after January 1, 2025, with cost basis reporting for covered digital asset transactions starting January 1, 2026.11Internal Revenue Service. Final Regulations and Related IRS Guidance for Reporting by Brokers on Sales and Exchanges of Digital Assets A 1099-B received for pre-2025 crypto activity flows onto the return the same way described above. Going forward, expect a 1099-DA instead. Capital gains and losses from digital asset sales must be reported on your return whether or not you receive a form.
Penalties for Late or Incorrect Filing
For returns due in calendar year 2026, penalties under 26 U.S.C. § 6721 scale by how late the fix arrives:12Internal Revenue Service. Internal Revenue Manual 20.1.7 – Information Return Penalties
- Corrected within 30 days: $60 per return
- Corrected after 30 days but by August 1: $130 per return
- Not corrected by August 1: $340 per return
- Intentional disregard: $680 per return, with no annual cap
Annual maximums track business size. Large businesses (average annual gross receipts over $5 million) face caps of $683,000, $2,049,000, and $4,098,500 for the three tiers. Small businesses face caps of $239,000, $683,000, and $1,366,000.
On the recipient side, leaving a 1099-B transaction off a return commonly triggers an automated underreporter notice. If the IRS finds underreporting, the accuracy-related penalty under 26 U.S.C. § 6662 adds 20 percent of the underpayment plus interest.13Internal Revenue Service. Accuracy-Related Penalty Report every sale on the 1099-B even when the basis looks wrong. Fix the basis on Form 8949; an omitted sale is what draws the notice.