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Capital gains and losses on Form 1099-B

When you exchange capital assets, like shares of stocks, bonds, or mutual funds, you may have capital gains or losses. Capital gains and losses are the difference between the adjusted basis of the asset (usually price you paid for the asset) and what you realized when selling the asset (usually what you sold it for).

Go to this section in Credit Karma Tax: Capital Gains

Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) is used to report sales of certain capital assets. The form is broken down into a number of sections, including:

  • A short description of the sold asset
  • Acquired and sold date
  • Bought and sold price
  • Withholdings from the sale proceeds

If you’ve received a Form 1099-B for your capital asset transactions, the information will populate on Form 8949 on your tax return.
Source: irs.gov

What’s the difference between short-term and long-term capital gains and losses?

Typically, short-term capital gains and losses are assets that you’ve held for one year or less before disposal. If you held an asset for over one year before disposal, your capital gains and losses are generally considered long-term. For example, if you sell stocks that you owned for one year and a day, then the transaction is considered a long-term sale.

Determining which category the transaction falls under can be crucial if you sold capital assets. Short-term gains are taxed as ordinary income (your tax bracket) while long-term capital gains are usually taxed at a lower rate.

If you sold assets that you acquired through several different purchases, you may type in "Various" in the box for Date acquired as long as the sale is listed under the same holding type. You must still correctly report if your capital gain or loss was short or long term.
Source: irs.gov

For additional information on tax brackets for capital gains, check out our editorial article: The capital gains tax rate: How it’s different than tax on other income

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