Capital Gains & Form 8949

posted Feb 26, 2013, 5:16 PM by Wayne Culp   [ updated Jul 8, 2013, 1:28 PM ]
Dave Rollins did his research and points out that we need to be careful with Cap Gains Wkst column "1099" in TaxWise.  Notice that it is not as straightforward as the TaxWise instruction for A, B, & C.  A Brokerage Statement may show a basis for a stock transaction, but the broker may chose NOT to report the basis to the IRS ... a box B is then appropriate, whether or not if the taxpayer support a different number.  Read the Brokerage 1099-B Statement carefully.

Report short-term gains and losses on Part I. Report long-term gains and losses on Part II.

Lines 1 and 3

Enter all sales and exchanges of capital assets, including stocks, bonds, etc., and real estate (if not reported on Form 4684, 4797, 6252, 6781, or 8824). Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. However, if the property you sold was your main home, see Sale of Your Home in the Instructions for Schedule D (Form 1040).

Enter the details of each transaction on a separate row (unless the Exception to reporting each transaction on a separate row described later applies to you). Use as many Parts I and Parts II of Form 8949 as you need.

Use a separate Part I for each of the following types of short-term transactions.

  1. Short-term transactions reported to you on Form 1099-B (or substitute statement) with an amount shown for cost or other basis unless the statement indicates that amount was not reported to the IRS. Check box A at the top of this Part I. If box 6b of Form 1099-B is not checked, which means basis was not reported to the IRS (or if your substitute statement shows cost or other basis for the transaction but indicates it was not reported to the IRS), report that transaction on Part I with box B, not box A, checked (see 2 below).

  2. Short-term transactions reported to you on Form 1099-B (or substitute statement) without an amount shown for cost or other basis. Check box B at the top of this Part I. If box 6b of Form 1099-B is not checked, which means basis was not reported to the IRS (or if your substitute statement shows cost or other basis for the transaction but indicates it was not reported to the IRS), report that transaction on Part I with box B, not box A, checked.

  3. Short-term transactions for which you cannot check box A or B because you did not receive a Form 1099-B (or substitute statement). Check box C at the top of this Part I.

Use a separate Part II for each of the following types of long-term transactions.

  1. Long-term transactions reported to you on Form 1099-B (or substitute statement) with an amount shown for cost or other basis unless the statement indicates that amount was not reported to the IRS. Check box A at the top of this Part II. If box 6b of Form 1099-B is not checked, which means basis was not reported to the IRS (or if your substitute statement shows cost or other basis for the transaction but indicates it was not reported to the IRS), report that transaction on Part II with box B, not box A, checked (see 2 below).

  2. Long-term transactions reported to you on Form 1099-B (or substitute statement) without an amount shown for cost or other basis. Check box B at the top of this Part II. If box 6b of Form 1099-B is not checked, which means basis was not reported to the IRS (or if your substitute statement shows cost or other basis for the transaction but indicates it was not reported to the IRS), report that transaction on Part II with box B, not box A, checked.

  3. Long-term transactions for which you cannot check box A or B because you did not receive a Form 1099-B (or substitute statement). Check box C at the top of this Part II.

Include on each Part I or Part II of Form 8949 only capital gains and losses described in the text for the box you check (A, B, or C) on that Part. You do not need to complete and file an entire copy of Form 8949 (Part I and Part II) if you have only gains and losses that fit into a single category (i.e., they are all either short-term or long-term and you can check a single box to describe all of them). In that case, you must complete and file either Part I or Part II and check the box that describes the gains and losses. If your gains and losses do not fit into a single category (i.e., some are short-term and some are long-term and/or some are described by the text for one box and some are described by the text for another box), complete a separate Part I or Part II for each category. Complete as many copies of Part I and Part II as you need to report each category of your gains and losses. Check only one box on each Part I and Part II. For example, if you check box A in one Part I, include on that Part I only short-term gains and losses from transactions reported to you on a statement showing that basis was reported to the IRS.

Include on your Schedule D the totals from all your Parts I and Parts II. Form 8949 and Schedule D explain exactly how to do this.

Follow the instructions in Pub 4012 when using the Cap Gain Wkt starting on page 2-10.  

  • a column (f) adjustment code may be needed, even if there is no adjustment, e.g. codes B, E, or C
  • Form 1099-B (broker's stmt) may show basis that is not reported to the IRS ... Read statement very carefully - only basis reproted to IRS gets the "A" code in 1099 column of Cap Gain Wkt.
Follow the following chart from page 2-12 when filling in the Cap Gains Wkt.  Notice that Note 1 states to use VARIOUS when purchases were on multiple dates.  For short-term transactions, the S/L column must be overridden and an S entered.  Remember that if you summarize the 1099-B, you must check the box on Schedule D and mail a copy of the statement with a  F8453. 
 


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