What’s IRS Form 8949?

Form 8949: Sales and Other Dispositions of Capital Assets is an IRS form for reporting investment profits and losses. Individual, partnership, corporation, trust, and estate taxpayers utilize the form.

Taxpayers must report short- and long-term capital gains and losses from investment transactions. The Form 8949 information matches the amounts reported to taxpayers and the IRS on Forms 1099-B, which brokerages issue to account holders annually.

Form 8949: Who Can File?

IRS Form 8949 allows individuals, partnerships, companies, trusts, and estates to report:

• Capital asset sales or exchanges not recorded elsewhere
• Profits from involuntary conversions of capital assets not employed in your firm (other than casualty or theft)
• Bad debts outside businesses
• Unworthiness of security
• Qualified Opportunity Fund capital gain deferral
• Suitable Opportunity Funds interest disposition

Joint return filers must complete appropriate pages to disclose their transactions. All Form 8949 page totals go to Schedule D.

Along with the list above, companies can utilize Form 8949 to record the sale of shares of a designated 10%-owned foreign corporation, adjusted for the dividends-received deduction under Section 245A, if the transaction would otherwise cause a loss.

Qualified Opportunity Funds allow taxpayers to postpone some or all of their qualifying gains.

Filling Out Form 8949

As reported to the IRS, selling a capital asset generates a gain or loss for tax reasons. See Schedule D for IRS capital gains and losses. Form 1040 reports most capital gains and losses. To calculate Schedule D’s net gain or loss, complete Form 8949.

Form 8949 requires the filer’s name and taxpayer ID number in two sections. Part I covers assets held for less than a year. Part II is for long-term transactions, assets held over a year. Identify each asset sold, its acquisition and sale date, and its price.

Annually, brokerages report Form 8949 transactions on Form 1099-B: Proceeds from Broker and Barter Exchange Transactions to account holders and the IRS. Investors can view the cost basis of their purchase and sell transactions on Form 1099-B.

In rare circumstances, Form 1099-B does not provide an asset-cost basis. The taxpayer must use Form 8949 to establish the base amount for capital asset gain or loss calculations. Form 8949 must list capital asset transactions without Form 1099-Bs.

Format 8949 can help fix Form 1099-B data errors. Form 8949 is unnecessary if 1099-B reports capital losses or profits for all assets correctly.

Remember to file Schedule D.

Finding Form 8949

Access all pages of Form 8949: Sales and Dispositions of Capital Assets on the IRS website.

Is Schedule D possible without Form 8949?

A taxpayer with capital gains or losses must file Form 8949 and Schedule D.

Form 8949 lists each transaction’s cost basis, selling date, price, and gain or loss.

That yields short-term and long-term gains or losses.

Calculating capital gains taxes requires plugging the amounts into a Schedule D.

What information is required on Form 8949?

Form 8949 requires the stock or other asset description, purchase price, purchase date, selling price, and selling date.

Should I report cryptocurrency transactions on Form 8949?

Buying and selling Bitcoin for profit in a taxable account or exchanging crypto for valuable products or services may necessitate Form 8949.

Bottom Line

Individuals and corporations record investment capital gains and losses on IRS Form 8949: Sales and Other Dispositions of Capital Assets. Sellers of capital assets like stock must file Form 8949 and Schedule D with their yearly tax return.

Form 8949 includes the property description, purchase price, purchase date, and selling price.

The yearly Form 1099-B that brokerages provide to account holders contains much of the information stock investors need to complete Form 8949.

Conclusion

• Form 8949 reports investment capital gains and losses for tax purposes.
• Due to various tax rates, Part I and Part II of the form segregate short-term and long-term capital gains and losses.
• Form 8949 requires Schedule D and Form 1099-B, which brokerages furnish to individual taxpayers.