Form 1099-B: Broker and Barter Transactions Explained

What is Form 1099-B?

Form 1099-B is used by brokers and barter exchanges to report proceeds from sales of securities, commodities, and certain barter transactions. It documents a taxpayer’s capital gains and losses for the year and provides the information needed to complete Form 8949 and Schedule D on the individual tax return.

Key takeaways

• Brokers and barter exchanges report each reportable transaction to both the investor and the IRS on Form 1099-B.
• Information from Form 1099-B is transferred to Form 8949 (details) and summarized on Schedule D (totals) for filing with Form 1040.
• Brokers must furnish copies of Form 1099-B to customers by February 15 following the tax year.
• Barter transactions report fair market value (FMV) of goods or services received; these may be taxable.

Who sends and who receives a 1099-B

• Brokers send Form 1099-B to the IRS and to any customer who sold investments during the year.
• Barter exchanges send Form 1099-B to participants when barter transactions generate reportable income.
• If you expect a 1099-B and don’t receive it by February 15, contact the issuer for a replacement.

What information the form contains

Typical items reported on Form 1099-B include:
* Issuer and recipient identification (names, taxpayer identification numbers)
* Description of property sold
* Date acquired and date sold
* Sale proceeds and cost basis (original price)
* Reported gain or loss
* Federal and state tax withheld (if any)
Notes:
* Commissions are generally not included on the form.
* For bartered goods/services, the FMV or trade credit received is reported.

How to report 1099-B on your tax return

1. Transfer each transaction detail from Form 1099-B to Form 8949 (Sales and Other Dispositions of Capital Assets).
2. Use Schedule D (Form 1040) to summarize totals of capital gains and losses from Form 8949.
3. Include Form 8949 and Schedule D with your tax return (you don’t attach the original 1099-B, but you must keep it for your records).

Capital losses and limits

• Capital losses offset capital gains. If losses exceed gains, up to $3,000 ($1,500 if married filing separately) of net capital loss may be deducted against ordinary income each year.
• Excess loss beyond the annual limit can be carried forward to subsequent tax years.

Barter transactions

Barter exchanges report the FMV of goods or services received. Reportable barter gains may consist of cash, property, or stock. Taxpayers must include these amounts when calculating taxable gains or income.

Common FAQs

Q: Do I file Form 1099-B with my return?
A: No. You report the information on Form 8949 and Schedule D, which you file with your return. Keep the 1099-B for your records.

Q: Is income on a 1099-B considered earned income?
A: No. 1099-B reports capital gains and losses from selling assets (investments), not earned income from employment.

Q: Must each transaction be reported separately?
A: Brokers typically report each transaction separately. Certain categories (e.g., short-term vs. long-term, or covered vs. noncovered basis) may be grouped according to IRS guidance.

Bottom line

Form 1099-B is the IRS record of proceeds from brokered sales and certain barter transactions. Use it to populate Form 8949 and then Schedule D to accurately report capital gains and losses. Keep copies of your 1099-Bs and related trade confirmations to support your tax return and to calculate basis adjustments, loss carryovers, and any required corrections.