What Is IRS Form 1099-B?

Every time you sell a security in a taxable brokerage account, your broker is required to report it to the IRS on Form 1099-B. The form shows how much you received from the sale, your cost basis (what you paid), and how long you held the investment. These details determine your capital gain or loss.

Short-Term vs. Long-Term

The tax treatment of your gain or loss depends on how long you held the investment before selling. If you held it for one year or less, it's a short-term gain or loss, taxed at ordinary income rates. If you held it for more than one year, it's a long-term gain or loss, eligible for the lower long-term capital gains rates — 0%, 15%, or 20% depending on your income.

Cost Basis Reporting

Your cost basis is what you paid for the investment, including commissions. For stocks purchased after 2011, brokers are required to track and report your cost basis to the IRS. For older shares, you may need to look up the cost yourself. If you reinvested dividends over the years, each reinvestment creates a new lot with its own basis — which is one reason why mutual fund cost basis tracking can get complicated.

Wash Sale Rules

If you sell a security at a loss and then repurchase the same or a substantially identical security within 30 days before or after the sale, the IRS disallows the loss. This is called the wash sale rule. The disallowed loss gets added to the cost basis of the new shares instead of being deducted immediately.

Schedule D

Capital gains and losses from your 1099-B get reported on Schedule D of your Form 1040. If you have losses that exceed your gains, you can deduct up to $3,000 of net capital losses against ordinary income each year, with the remainder carried forward to future years.

If you received a 1099-B with dozens of transactions, most tax software can import it directly from your broker, which saves a lot of manual entry.