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FORM 1099-B

 

What is form 1099-B?

A form issued by a broker or barter exchange that summarizes the proceeds of all stock transactions. The sale of a stock will be accompanied by a gain or loss, which must be reported to the IRS when you file your taxes. Specifically, figures from form 1099-B are used on IRS Form 1040, Schedule D. For example, let's assume you sold several stocks within the last year and the proceeds of the transactions equal a capital gain of $20,000. The amount gained from the sale of the stocks will be issued in form 1099-B by your broker and this amount must be included when you file your income taxes.

 
Who is supposed to file form 1099-B?

A broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person:

  • For whom the broker has sold (including short sales) stocks, bonds, commodities, regulated futures contracts, foreign currency contracts (pursuant to a forward contract or regulated futures contract), forward contracts, debt instruments, etc., for cash,
  • Who received cash, stock, or other property from a corporation that the broker knows or has reason to know has had its stock acquired in an acquisition of control or had a substantial change in capital structure reportable on Form 8806, or
  • Who exchanged property or services through a barter exchange.

 

Exceptions to file form 1099-B

Brokers are not required to file, but may file, Form 1099-B for the following.

  • Sales for exempt recipients, including corporations, charitable organizations, IRAs, Archer MSAs, health savings accounts (HSAs), the United States, a state, or political subdivisions.
  • Sales initiated by dealers in securities and financial institutions.
  • Sales by custodians and trustees, provided the sale is reported on a properly filed Form 1041, U.S. Income Tax Return for Estates and Trusts.
  • Sales at issue price of interests in certain regulated investment companies
  • Obligor payments on:
    • a. Nontransferable obligations, such as savings bonds or CDs.
    • b. Obligations for which gross proceeds are reported on other Forms 1099, such as stripped coupons issued before July 1, 1982.
    • c. Retirement of short-term obligations with original issue discount that is reported on Form 1099-INT, Interest Income. However, Form 1099-B is required for the retirement of short-term state obligations having no original issue discount.
    • d. Callable demand obligations that have no premium or discount.
  • Sales of foreign currency unless under a forward or regulated futures contract that requires delivery of foreign currency
  • Sales of fractional shares of stock if gross proceeds are less than $20.
  • Retirements of book-entry or registered form obligations if no interim transfers have occurred.
  • Sales for exempt foreign persons as defined in Regulations section 1.6045-1(g)(1).
  • Sales of Commodity Credit Corporation certificates.
  • Spot or forward sales of agricultural commodities.
  • Some sales of precious metals.
  • Grants or purchases of options, exercises of call options, or entering into contracts that require delivery of personal property or an interest therein.

 

For more information visit: http://www.irs.gov/instructions/i1099b/ar02.html

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