How to Read a 1099-B for Capital Gains and Losses

Learning how to read a 1099-B starts with knowing that the form is a box-by-box record of every security your broker sold for you during the year, and that the IRS receives an identical copy. Your broker must send you the form by February 15 of the following year.¹ If the numbers on your return don’t line up with the numbers in these boxes, the IRS matching program will flag it. So the goal isn’t just to glance at the totals; it’s to understand what each box is telling you and how those figures flow onto Form 8949 and Schedule D.

The Core Transaction Boxes: 1a Through 1e

The left side of the form describes the sale itself. Read these five boxes in order and you have the whole trade.

Box 1a is the description of the property: the security’s name or ticker and the number of shares. For an options contract, it names the underlying security and the number of shares the contract covers.
Box 1b is the date you acquired the security. If you bought the shares on several different dates, this box may be blank.
Box 1c is the trade date of the sale.
Box 1d is the proceeds. Brokers reduce this figure by commissions and transfer taxes tied to the sale, so it reflects the net cash that hit your account.²
Box 1e is your cost or other basis: the purchase price plus commissions and fees you paid to buy the security.²

The core math is simple. Box 1d minus Box 1e is your gain or loss. Sell shares for $5,000 that you bought for $3,200, and your gain is $1,800. Adjustments in Boxes 1f and 1g can change that figure, and both are covered below.

Box 2: Short-Term or Long-Term

Box 2 tells you whether the sale is short-term or long-term, and that classification decides the tax rate. Short-term gains, from securities held one year or less, are taxed at your ordinary income rate. Long-term gains, from securities held longer than a year, qualify for preferential rates of 0%, 15%, or 20% depending on your total taxable income.³

The holding period begins the day after you acquire the security and includes the day you sell. A stock bought on June 14 and sold on June 15 of the next year has been held exactly one year, which is still short-term; one more day makes it long-term. Box 2 also has an “Ordinary” checkbox, which the broker marks when part of the gain should be taxed as ordinary income rather than as a capital gain, as can happen with certain debt instruments or accrued market discount.

Near the top of the form is a code box labeled “Applicable checkbox on Form 8949.” The code (A, B, D, E, or X) tells you exactly which section of Form 8949 the transaction belongs in, so you don’t have to figure the classification yourself.²

Box 1g: Wash Sales

This is the box that surprises the most people. A wash sale happens when you sell a security at a loss and buy the same or a substantially identical security within 30 days before or after the sale. The IRS disallows the loss for the period.⁴ The full window is 61 days: 30 before, the sale itself, and 30 after.

If Box 1g shows an amount, that’s the piece of your loss you can’t deduct this year. The loss isn’t lost forever. It gets added to the cost basis of the replacement shares, so you recover it when you eventually sell those shares without triggering another wash sale. Sell 100 shares at a $500 loss and buy them back inside the window, and Box 1g will show $500 while the basis of your new shares goes up by $500.⁵

Two situations catch people out: frequent trading in the same ticker, and dividend reinvestment plans that automatically buy shares of a stock you recently sold at a loss. If you see a figure in Box 1g that you don’t recognize, pull your transaction history and check every purchase in that 61-day window.

Box 1f: Accrued Market Discount

Box 1f is mostly a bond-investor box. When you buy a bond below its face value and later sell or redeem it, part of your profit reflects the price moving back toward par. That portion is called market discount, and the IRS treats it as ordinary income rather than as a capital gain. The amount in Box 1f is the piece of the proceeds that should be reported as ordinary income on your return, not lumped into the capital gains section of Schedule D. Most tax software splits this automatically once you enter the 1099-B, but verify it if you’re filing by hand.

Box 5 and Box 12: Covered vs. Non-Covered Securities

Whether Box 1e is filled in at all depends on whether the security is “covered.” A covered security is one your broker must track and report basis for, both to you and to the IRS. Box 5 is the tell: if it’s checked, the security is non-covered, and the broker was not required to report basis in Box 1e.² Box 12 does a related job, showing whether basis was actually reported to the IRS.

When a security is non-covered, Box 1e may be blank or contain an unverified estimate, and it’s on you to supply an accurate basis from your own records. Dig up the original purchase confirmation. The IRS has no number to cross-reference, but using the wrong basis still costs you: too high and you overpay, too low and you invite a notice.

The Smaller Boxes Worth Checking

Box 4, federal income tax withheld: shows any backup withholding your broker took, typically at a 24% rate, which can happen if you didn’t provide a valid taxpayer identification number. Report the amount to claim the credit on your return.
Box 6, reported to IRS (gross or net proceeds): tells you whether Box 1d was reported gross or net. If a noncompensatory option led to the sale and “net proceeds” is indicated, the broker already adjusted for the option premium. If Box 6 shows gross proceeds but your statement lists commissions separately, reconcile the two figures.
Box 7, loss not allowed based on amount in Box 1d: checked when the wash sale adjustment in Box 1g was calculated from the proceeds rather than the actual loss. Rare, and worth double-checking the math when it appears.
The FATCA filing requirement checkbox near the top is marked when a foreign financial institution reports payments to a U.S. account, or when a U.S. payer meets chapter 4 requirements. If it’s checked, the account number field becomes mandatory. Most domestic investors will never see it checked.²
Boxes 14 through 16 handle state reporting: the state abbreviation, the broker’s state ID number, and any state income tax withheld. They’re a convenience for brokers in the Combined Federal/State Filing Program and are not required for IRS purposes.²

Moving the Numbers to Form 8949 and Schedule D

Your 1099-B doesn’t go straight onto your tax return. The data flows through Form 8949, and the totals from that form carry to Schedule D.⁶ Form 8949 splits into Part I for short-term transactions and Part II for long-term. Inside each part, you check one box that reflects the basis reporting status shown on your 1099-B:

Box A (short-term) or Box D (long-term): basis was reported to the IRS. Covered securities with a full paper trail.
Box B (short-term) or Box E (long-term): basis was not reported to the IRS. Typically non-covered securities.
Box C (short-term) or Box F (long-term): you didn’t receive a 1099-B for the transaction.

For each transaction, put Box 1d proceeds in column (d), Box 1e basis in column (e), and any adjustment such as a wash sale from Box 1g in column (g), with the identifying code in column (f). Column (h) gives the gain or loss after adjustments. Totals from Form 8949 then flow to the matching lines on Schedule D.⁶

There’s a shortcut worth knowing. If every transaction on your 1099-B has basis reported to the IRS and no adjustments are needed, you can skip Form 8949 and report the aggregate totals directly on Schedule D, line 1a for short-term or line 8a for long-term.

If Your 1099-B Is Wrong

Brokers do make mistakes. The most common errors are an incorrect cost basis (especially for shares transferred in from another brokerage), a wrong acquisition date, or proceeds that don’t match your own records. Contact your broker and ask for a corrected form; they’re required to issue one when they learn the original was wrong.

Don’t file with numbers you know are wrong and hope it sorts itself out. If a corrected form isn’t going to arrive before the deadline, either file using the correct figures you can document (using column (g) on Form 8949 to explain the adjustment) or file an extension. Keep your trade confirmations and account statements. If the IRS sends a notice because your return doesn’t match the original 1099-B, those records are what prove your numbers.

Getting this right matters. If a misreported wash sale, understated proceeds, or wrong cost basis reduces the tax you owe, the IRS can assess an accuracy-related penalty of 20% of the underpayment, with interest running from the original due date.⁷ Matching your return to the 1099-B, and documenting any adjustments on Form 8949, is what usually keeps notices from arriving in the first place.

A Note on Digital Assets

Cryptocurrency and other digital asset sales aren’t reported on Form 1099-B anymore. Starting with sales on or after January 1, 2025, brokers report proceeds on the new Form 1099-DA, with cost basis reporting beginning for transactions on or after January 1, 2026.⁸ Older crypto sales may still appear on a 1099-B, or on no form at all, leaving the tracking to you. The core concepts you use to read a 1099-B (proceeds, basis, holding period, wash sales) work the same way on the 1099-DA.

1
Internal Revenue Service. General Instructions for Certain Information Returns (2026)
2
Internal Revenue Service. Instructions for Form 1099-B (2026)
3
Internal Revenue Service. Fact Sheet FS-2007-19 – Reporting Capital Gains
4
Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities
5
Internal Revenue Service. Case Study 1 – Wash Sales
6
Internal Revenue Service. 2025 Instructions for Form 8949
7
Internal Revenue Service. Accuracy-Related Penalty
8
Internal Revenue Service. Final Regulations and Related IRS Guidance for Reporting by Brokers on Sales and Exchanges of Digital Assets