Taxpayers must report their capital gains and losses on IRS Schedule D on their federal income tax return. Brokerage firms normally send 1099-Bs to their clients and the IRS for each closed trade, but when brokerage firms don’t report the trades or furnish clients with 1099-Bs, investors are responsible for reporting those trades on Schedule D, line 3.
Take your monthly brokerage statements and start by matching up each completed trade. Now take each 1099-B statement and match it against the completed trade as listed on your brokerage statements. Do this for each 1099-B you received. Highlight the trades on your brokerage statements for which you did not receive a 1099-B. Now separate those trades into two groups: assets that were held less than one year and those held for more than one year.Step 2
Go to the IRS website and download Form 8949 and Schedule D. Starting with Form 8949, fill in your name and Social Security Number at the top of the page. If you have short-term capital gains or losses, start with Part I. There are three boxes asking if the 1099-B was reported with or without basis. Because you did not receive a 1099-B, check Box "C."Step 3
Enter a description, starting with Line 1, of the property in column "a." In column "c," enter the month, day and year you bought the asset, and in column "d," enter the month, day and year you sold the asset. Enter the sales price in column "e" and the purchase price in column "f." Repeat the process for each completed trade. Enter the total of columns "e" and "f" on line 2. Report long-term trades for which you did not receive a 1099-B in Part II, completing it as you did for Part 1.Step 4
Get out your Schedule D and enter your name and Social Security number at the top of the page. If you have short-term gains or losses, take the total amount from Form 8949, line 2, column "e" and enter it on Schedule D, part 1, line 3, column "e." Now take the total amount on Form 8949, line 2, column "f" and enter it on Schedule D, part 1, line 3, column "f." Subtract Schedule D, column "e," from column "f" and enter the amount in column "h." Enter that total on line 7. Long-term assets are reported on Schedule D, part II, line 10, the same way you reported short-term assets.
Items you will need
- IRS Form 8949 and Schedule D
- Monthly brokerage statements
- Monthly 1099-B statements
- Be sure to transfer the amounts from Form 8949 to Schedule D accurately to avoid potential problems with the IRS.
- Use a separate Form 8949 for each box you could check. If you received a 1099-B for some trades, but not for others, you must file two Forms 8949.
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