Information on the 1099-B

In most cases, a 1099-B form provides information about securities or property involved in a transaction handled by a broker.

This includes:

  • A brief description of the item sold, such as “100 shares of XYZ Co"
  • The date you bought or acquired it
  • The date you sold it
  • How much it cost you to acquire it
  • How much you received for it when you sold it
  • Whether your broker withheld any federal tax

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How Form 1099-B is used

The 1099-B helps you deal with capital gains taxes. Usually, when you sell something for more than it cost you to acquire it, the profit is a capital gain, and it may be taxable. On the other hand, if you sell something for less than you paid for it, then you may have a capital loss, which you might be able to use to reduce your taxable capital gains or other income.

  • You pay capital gains taxes with your income tax return, using Schedule D.
  • The data from Form 1099-B helps you fill out Schedule D and Form 8949 if needed.

Short-term and long-term gains

Box 2 of the form tells whether the gain or loss involved is short-term or long-term.

Generally,

  • If you owned an asset, such as stock, for a year or less before selling it, any gain or loss from a sale is short-term.
  • If you owned it for more than a year, you would normally have a long-term gain.
  • The distinction is extremely important, since tax rates on long-term gains are generally significantly lower than those on short-term gains.

Some brokerage companies issue a "Composite 1099 Form" that replaces multiple individual 1099 forms such as,

  • 1099-B,
  • 1099-INT, and
  • 1099-DIV.

Sometimes, the individual sections of the composite forms do not include all of the information that is available on a standard 1099 form, such as the check boxes for short-term and long-term transactions on the standard 1099-B form. Instead, many of these composite forms simply group the different types of transactions so that you can readily tell which ones are short-term and long-term.

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Barter exchanges

A secondary use of Form 1099-B is to report barter exchange transactions. A barter exchange is a network of people or companies who agree to trade property or services with one another without accepting payment in currency.

Barter exchanges use Box 13 of the form to report the fair market value of all goods and services received by an individual member of the exchange over the course of a year. In general, value received through a barter exchange is considered income and may be taxable.