1099-B Proceeds From Broker and Barter Exchange Transaction

Proceeds from broker and barter exchange provides the sales proceeds from multiple transactions, including sales, exchanges, covered options, and tender offers on page 2 of the Consolidate Forms 1099.

1099-B Proceeds from broker and barter exchange reporting is made up of four separate sub-sections on the 1099-B Summary Section. The first three sections are separated based upon cost basis reporting regulations, while the fourth section includes Regulated Futures, Section 1256 contracts.

IRS regulations classify covered and noncovered securities as outlined in the table below:

  Covered Securities Uncovered Securities
Broker/dealer vs. Tax Payer Responsibility Brokers/dealers report cost basis to IRS and taxpayer on Form 1099-B. Taxpayer will use From 1099-B data to prepare their tax returns. Taxpayer to maintain and report cost basis to IRS. Includes assets designated as noncovered due to asset type or incomplete cost basis information.
Equities Acquired on or after January 1, 2011 Acquired prior to January 1, 2011
Mutual Funds Acquired on or after January 1, 2012 Acquired prior to January 1, 2012
Fixed Income and options Acquired on or after January 1, 2014 Acquired prior to January 1, 2014

1099-B Summary Page

Transaction details appear following the Consolidated Forms 1099- Summary page. Boxes 1d to 1g of the 1099-B report the combined total for securities classified within sections one through three. We include cost basis reporting to the IRS for covered securities. Noncovered securities are exempt from broker cost basis reporting due to either designation or unknown information.

1099-B Sub Sections

  1. Covered Securities with Short-Term gains or losses

    • Section one reports proceeds and cost basis information for covered securities with a short-term gain or loss. Grouped by their unique security identification number (CUSIP or ISIN), these covered securities correspond with the Worksheet for Form 8949 Part I Short-Term Capital Gains and Losses - Assets Held One Year or Less, Box A.

    • Box 1e reflects the original or adjusted cost basis. If applicable, a cost basis adjustment code may appears under Box 1f within the section's transaction details that follow the Summary.

  2. Covered Securities with Long-Term gains or losses

    • Section two reports information for transactions of covered securities with a long-term gain or loss. Also grouped by security identification number, these assets correspond with the Worksheet for Form 8949 Part II Long-Term Capital Gains and Losses - Assets Held More Than One Year, Box D.

  3. Noncovered Securities

    • Section three reports transaction of non-covered securities including index options without determination of holding period. Securities under this section include transactions for which the cost basis is not known or not reportable by us to the IRS. Based on personal records, the taxpayer must report the cost basis and determine the short or long term.

    • These assets correspond with the Worksheet for Form 8949 Part I Short-Term Capital Gains and Losses, Box B, as well as Part II Long-Term Capital Gains and Losses, Box E.

  4. Regulated Future Contracts and Options

    • We are required to report the aggregate profit/loss in four components under Boxes 8 to 11, even though taxpayers only report the aggregate profit/loss from regulated futures.

    • All settled or closed contracts during the tax year are displayed in Box 8. Any unrealized profit or loss at the beginning of the year (Box 9) and at the end of the year (Box 10) is adjusted from Box 8 to report an aggregate profit or loss on all contracts, open or closed, in Box 11.

    • For a contract level profit and loss summary, we include a Gain/Loss Worksheet for 1256 Contracts as part of our Year End Reports. There is one section for Futures and one section for Options.

Important Points

  • Wash Sales: Brokers take into wash sales with calculating cost basis and holding period for covered securities within an account. The amount of the disallowed loss and the subsequent cost basis adjustment will be reported. For an understanding of wash sale basics, click here.

  • Bond/Option: Bond and option purchases became covered securities as of January 1, 2014.

  • Form 8949 Worksheet: Transactions not reported to the IRS on Form 1099-B may be included on your 8949 Worksheet, along with details for each 1099-B transaction.

  • Multiple Trading Account: Each of these reports is specific to the account associated with the report, however the tax code requires you to report on your tax return across all of your trading accounts. If you hold the same security in multiple accounts and sell it, the gain or loss calculated and reported to the IRS may be different than presented on an account level and must be adjusted.

  • Tax ID Numbers: An IRS identity protection ruling allows truncated reporting of tax ID numbers on 1099s. Account tax ID numbers display the last four digits (XXX-XX-0123) on our tax forms.

Note: IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.