Form 1099-B: Proceeds and Cost Basis Explained

What Is Form 1099-B?

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, is an information return brokers and barter exchanges use to report certain sales and exchanges to a customer and the IRS. It commonly reports a description of the property, acquisition and sale dates, proceeds, cost basis when required, holding-period classification, and federal or state withholding.

Form 1099-B does not report taxable gain as one automatic number. A taxpayer generally calculates gain or loss by comparing proceeds with adjusted basis and then applying any required adjustments.

What information is on Form 1099-B?

Common fields include:

• Box 1a: description of property.
• Box 1b: date acquired.
• Box 1c: date sold or disposed.
• Box 1d: proceeds.
• Box 1e: cost or other basis.
• Box 1f: accrued market discount.
• Box 1g: wash-sale loss disallowed.
• Box 2: short-term or long-term classification.
• Box 3: whether proceeds relate to collectibles or qualified opportunity fund interests.
• Box 4: federal income tax withheld.
• Box 5: whether the security is noncovered.
• Box 6: whether gross or net proceeds were reported.
• Box 12: whether basis was reported to the IRS.
• State boxes: state identification and withholding.

A consolidated brokerage statement may include many Forms 1099-B in transaction tables rather than separate pages. Use the statement's tax-reporting sections, not only an account-performance summary.

Proceeds are not profit

Priya sells stock for $12,000. Her Form 1099-B reports $12,000 of proceeds and $8,500 of basis. Before other adjustments, her gain is $3,500 — not $12,000.

If the $8,500 basis omitted $300 of reinvested dividends that had already been taxed and added to basis, the corrected basis may be $8,800 and the gain $3,200. If a wash-sale adjustment applies, some or all of a current loss may be deferred instead. This is why both the information statement and underlying records matter.

Covered and noncovered securities

For a covered security, a broker generally must report basis to the IRS under the applicable reporting rules. For a noncovered security, the broker generally is not required to report basis to the IRS. Form 1099-B may leave basis blank or show information that was not reported to the IRS.

"Basis not reported" does not mean basis is zero. The taxpayer must determine the correct amount from purchase confirmations, prior statements, corporate-action records, inheritance or gift documents, and other evidence.

Even reported basis can require adjustment. Common issues include employee stock transactions, inherited or gifted assets, return-of-capital distributions, wash sales across accounts, mergers, spinoffs, and transfers between brokers.

How Form 1099-B reaches the tax return

Transactions are generally reported on Form 8949 by category:

• Short-term, basis reported to the IRS.
• Short-term, basis not reported to the IRS.
• Short-term, no Form 1099-B.
• Long-term versions of those same categories.

Form 8949 allows codes and amounts to correct basis or reflect other adjustments. Its subtotals generally flow to Schedule D, which combines capital gains and losses with capital-gain distributions, carryovers, and other capital items.

Why Form 1099-B totals must be reconciled

The IRS receives proceeds information, so the return should reconcile to the reported gross or net proceeds. Omitting a sale can cause an automated notice that treats proceeds as though little or no basis existed.

Reconciliation should also identify:

• Duplicate or corrected statements.
• Sales reported by more than one broker.
• Transactions missing from the statement.
• Whether commissions are already reflected.
• Wash sales and other adjustments.
• Backup withholding.
• Sales reported on Form 1099-DA or another form.

Digital-asset broker reporting is transitioning to Form 1099-DA. Do not force a Form 1099-DA transaction into the 1099-B workflow without following the applicable year's instructions.

California treatment

California generally starts with federal income but does not provide a special lower tax rate for long-term capital gains. California basis can also differ from federal basis because of depreciation, deferrals, prior state adjustments, or differences in law.

When California gain or loss differs from the federal amount, a resident may need California Schedule D (540). Nonresidents and part-year residents must also apply California sourcing and Schedule D (540NR) rules.

Documents to gather

• Every original and corrected Form 1099-B.
• Complete consolidated brokerage statements.
• Trade confirmations and acquisition records.
• Statements from prior brokers.
• Reinvested-dividend records.
• Corporate-action notices.
• Gift, inheritance, and trust records.
• Employee stock-plan records.
• Prior-year capital-loss carryover worksheet.
• Federal and California depreciation or basis schedules.

Common Form 1099-B mistakes

• Reporting proceeds as taxable gain.
• Entering zero basis merely because box 1e is blank.
• Combining short-term and long-term sales.
• Ignoring box 1g wash-sale adjustments.
• Reporting only the net gain from a brokerage summary.
• Failing to reconcile corrected or multiple statements.
• Assuming federal and California basis are always identical.
• Omitting a loss transaction because it does not reduce the current tax.

Frequently asked questions

Related terms

• Cost Basis
• Capital Gain
• Capital Loss
• Wash Sale
• Schedule D

Official sources

• IRS — About Form 1099-B
• IRS — 2026 Instructions for Form 1099-B
• IRS — 2025 Instructions for Form 8949
• IRS — Publication 550, Investment Income and Expenses
• California FTB — 2025 Schedule D (540) instructions

The definitions and examples on this page are for informational purposes only and do not constitute tax advice. Tax laws change frequently and individual circumstances vary. Consult a qualified tax professional before making decisions based on this content.