Table of Contents
A broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person:
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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,
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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
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Who exchanged property or services through a barter exchange.
A broker is any person who, in the ordinary course of a trade or business, stands ready to effect sales to be made by others. A broker may include a U.S. or foreign person or a governmental unit and any subsidiary agency.
You are considered a broker if:
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You are an obligor that regularly issues and retires its own debt obligations or
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You are a corporation that regularly redeems its own stock.
However, for a sale, redemption, or retirement at an office outside the United States, only a U.S. payer or U.S. middleman is a broker. See Regulations sections 1.6045-1(g)(1) and 1.6049-5(c)(5).
You are not considered a broker if:
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You are a corporation that purchases odd-lot shares from its stockholders on an irregular basis (unless facts indicate otherwise),
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You manage a farm for someone else, or
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You are an international organization that redeems or retires its own debt. See Regulations section 1.6045-1(a)(1).
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Covered securities (defined later) with short-term gain or loss,
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Covered securities with long-term gain or loss, and
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Noncovered securities (securities that are not covered securities) if you choose to check box 6a when reporting their sale.
Example.
Your customer Mary bought shares of stock in ABC Corporation in April 1995, April 2011, and August 2011. The shares of stock bought in 2011 are covered securities. The shares of stock bought in April 1995 are noncovered securities. In June 2012, Mary sells all of the stock in a single transaction. Even though the stock was sold in a single transaction, you will have to report the sale of the covered securities on two separate 2012 Forms 1099-B (one for the securities bought in April 2011 with long-term gain or loss and one for the securities bought in August 2011 with short-term gain or loss). You may report the sale of the noncovered securities bought in April 1995 either on a third Form 1099-B or on the Form 1099-B reporting the sale of the covered securities bought in April 2011 (reporting long-term gain or loss). You must report the sale of the noncovered securities on a third Form 1099-B if you want to leave boxes 1b, 1c, 3, and 5 blank or if you want to report this information and not be subject to penalties under section 6721 or 6722 for failing to report this information correctly. In either case, you must check box 6a.
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You are reporting both short-term and long-term gain or loss from a short sale closed by delivery of covered securities (as just explained under How many forms to file for each transaction,
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The securities delivered to close the short sale include both covered securities and noncovered securities (as explained under How many forms to file for each transaction, or
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There was backup withholding and other conditions apply (see below).
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From the gross proceeds when the short sale is opened, or
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From any gain when the short sale is closed if you expect to be able to determine the gain on the short sale at that time.
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You are a broker reporting the sale of a security held by a WHFIT to the WHFIT trustee, or
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You are a trustee or middleman of a WHFIT reporting non pro-rata partial principal payments, trust sale proceeds, redemption asset proceeds, redemption proceeds, sales asset proceeds, and sales proceeds to a TIH.
A tax information statement that includes the information provided to the IRS on Form 1099-B, as well as additional information identified in Regulations section 1.671-5(e), must be provided to TIHs. The written tax information statement furnished to the TIH for 2012 is due on or before March 15, 2013. The amount of an item of a trust expense that is attributable to a TIH must be included on the tax information statement provided to the TIH and is not required to be included in box 5 on the Form 1099-DIV. See Regulations section 1.671-5(e) for a complete list of the items of information that must be included in the statement to the TIH.
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Sales for exempt recipients, including the following.
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Charitable organizations.
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IRAs.
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Archer MSAs and health savings accounts (HSAs).
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The United States or any state or a political subdivision of the United States or any state.
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Corporations. However, see Identifying a corporation, later, for instructions about how to know whether a customer is a corporation for this purpose. Also, you must file Form 1099-B for the sale of a covered security (defined later) by an S corporation if the S corporation acquired the covered security after 2011.
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Sales initiated by dealers in securities and financial institutions.
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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.
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Sales at issue price of interests in certain regulated investment companies.
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Obligor payments on:
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Nontransferable obligations, such as savings bonds or CDs.
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Obligations for which gross proceeds are reported on other Forms 1099, such as stripped coupons issued before
July 1, 1982. -
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.
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Callable demand obligations that have no premium or discount.
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Sales of foreign currency unless under a forward or regulated futures contract that requires delivery of foreign currency.
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Sales of fractional shares of stock if gross proceeds are less than $20.
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Retirements of book-entry or registered form obligations if no interim transfers have occurred.
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Sales for exempt foreign persons as defined in Regulations section 1.6045-1(g)(1).
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Sales of Commodity Credit Corporation certificates.
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Spot or forward sales of agricultural commodities. See below.
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Some sales of precious metals. See Sales of precious metals, later.
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Grants or purchases of options, exercises of call options, or entering into contracts that require delivery of personal property or an interest therein.
For sales of covered securities (defined later) that were acquired after 2011, you cannot rely on Regulations section 1.6049-4(c)(1)(ii)(A) to tell whether a customer is a corporation. However, for sales of all securities, you can treat a customer as an exempt recipient if one of the following statements is true.
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The name of the customer contains the term “insurance company,” “indemnity company,” “reinsurance company,” or “assurance company.”
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The name of the customer indicates it is an entity listed as a per se corporation under Regulations section 301.7701-2(b)(8)(i).
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You receive a properly completed exemption certificate on Form W-9 that shows the customer is not an S corporation.
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Your receive a Form W-8 that includes a certification that the person whose name is on the form is a foreign corporation.
Agricultural commodities include grain, feed, livestock, meat, oil seed, timber, and fiber. A spot sale is a sale that results in almost immediate delivery of a commodity. A forward sale is a sale under a forward contract. However, sales and exchanges of timber for lump-sum payments must be reported on Form 1099-S.
Report sales of agricultural commodities under a regulated futures contract, sales of derivative interests in agricultural commodities, and sales of receipts for agricultural commodities issued by a designated warehouse on Form 1099-B. A designated warehouse is a warehouse, depository, or other similar entity designated by a commodity exchange in which or out of which a particular type of agricultural commodity is deliverable to satisfy a regulated futures contract. Sales of warehouse receipts issued by any other warehouse are not reportable.
A sale of a precious metal (gold, silver, platinum, or palladium) in any form for which the Commodity Futures Trading Commission (CFTC) has not approved trading by regulated futures contract (RFC) is not reportable. Further, even if the sale is of a precious metal in a form for which the CFTC has approved trading by RFC, the sale is not reportable if the quantity, by weight or by number of items, is less than the minimum required quantity to satisfy a CFTC-approved RFC.
For example, a broker selling a single gold coin does not need to file Form 1099-B even if the coin is of such form and quality that it could be delivered to satisfy a CFTC-approved RFC if all CFTC-approved contracts for gold coins currently call for delivery of at least 25 coins.
Sales of precious metals for a single customer during a 24-hour period must be aggregated and treated as a single sale to determine if this exception applies. This exception does not apply if the broker knows or has reason to know that a customer, either alone or with a related person, is engaging in sales to avoid information reporting.
Any person that transfers custody of a specified security (defined later) to a broker after 2010 (after 2011 if the stock is in a regulated investment company) must give the broker a written transfer statement within 15 days after the date of settlement for the transfer.
The transferor must furnish a separate statement for each security and, if transferring custody of the same security acquired on different dates or at different prices, for each acquisition. However, a separate statement is not required for:
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Noncovered securities, and
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Securities acquired more than 5 years before the transfer for which basis is determined using an average basis method.
These rules apply to:
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Any broker,
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Anyone that acts as a custodian of securities in the ordinary course of a trade or business,
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Any issuer of securities,
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Any trustee or custodian of an individual retirement plan, or
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Any agent of the above.
These rules do not apply to:
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The beneficial owner of a security or any agent substituted for an undisclosed beneficial owner,
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Any governmental unit or any agency or instrumentality of a governmental unit holding escheated securities, or
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Any organization that holds and transfers obligations among members as a service to its members.
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Date the statement is furnished,
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Name, address, and telephone number of the person furnishing the statement,
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Name, address, and telephone number of the broker receiving custody of the security,
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Name of the customer(s) for the account from which the security is transferred,
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Account number for the transferring account and, if different, the receiving account,
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CUSIP number of the transferred security,
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Number of shares or units,
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Type of security (such as stock),
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Date the transfer was initiated and settlement date of the transfer (if known), and
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The security's total adjusted basis, original acquisition date, and, if applicable, the holding period adjustment under section 1091.
The adjusted basis, original acquisition date, and holding period adjustment are not required if the transfer statement identifies the security as a noncovered security.
If the names of the customer(s) for the transferring and receiving accounts are not the same, the transfer statement must also include the name of the customer(s) for the account to which the security is transferred. However, if the transfer is to or from an account for which a broker, custodian, or other person subject to the transfer reporting rules is the customer, the transfer statement must treat the beneficial owner or, if applicable, an agent substituted by an undisclosed beneficial owner, as the customer for both accounts, and the broker receiving the transfer statement should treat the security as held for the beneficial owner or the beneficial owner's agent regardless of the customer listed for the broker's account.
The person giving and the broker receiving the transfer statement can agree to combine the information in any format or to use a code in place of one or more required items. Determine the adjusted basis and other information to be reported as explained in these instructions. If the basis of the transferred security is determined using an average basis method, any securities acquired more than 5 years prior to the transfer may be reported on a single statement on which the original acquisition date is reported as “various,” but only if the other information reported applies to all the securities.
An issuer of a specified security (defined later) that takes an organizational action that affects the basis of the security must file an issuer return on Form 8937. This applies to organizational actions after 2010 (after 2011 if the stock is in a regulated investment company). The return is due on or before the 45th day following the organizational action or, if earlier, January 15 of the next calendar year.
An issuer is not required to file this return if, by the due date, the issuer posts the return with the required information in a readily accessible format in an area of its primary public website dedicated to this purpose and, for 10 years, keeps the return accessible to the public on its primary public website or the primary public website of any successor organization.
A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis. Persons who do not contract with a barter exchange but who trade services do not file Form 1099-B. However, they may have to file Form 1099-MISC.
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Exchanges through a barter exchange having fewer than 100 transactions during the year,
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Exempt foreign persons as defined in Regulations section 1.6045-1(g)(1), or
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Exchanges involving property or services with a fair market value of less than $1.00.
If you are required to file Form 1099-B, you must provide a statement to the recipient. For more information about the requirement to furnish a statement to the recipient, see part M in the 2012 General Instructions for Certain Information Returns.
You may enter an “X” in this box if you were notified by the IRS twice within 3 calendar years that the payee provided an incorrect taxpayer identification number (TIN). If you mark this box, the IRS will not send you any further notices about this account. However, if you received both IRS notices in the same year, or if you received them in different years but they both related to information returns filed for the same year, do not check the box at this time. For purposes of the two-notices-in-3-years rule, you are considered to have received one notice, and you are not required to send a second “B” notice to the taxpayer upon receipt of the second notice. See part N in the 2012 General Instructions for Certain Information Returns for more information.
For transactional reporting by brokers, enter the CUSIP (Committee on Uniform Security Identification Procedures) number of the security.
The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-B. Additionally, the IRS encourages you to designate an account number for all Forms 1099-B that you file. See part L in the 2012 General Instructions for Certain Information Returns.
For broker transactions, enter the trade date of the sale or exchange. For short sales, see Short sales of securities, earlier. For barter exchanges, enter the date that cash, property, a credit, or scrip is actually or constructively received.
Enter the acquisition date of any securities sold. Leave this box blank if:
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The securities sold were acquired on a variety of dates, or
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You check box 6a and do not choose to complete box 1b.
For short sales, see Short sales of securities, earlier.
Determine whether the gain or loss is short-term or long-term under section 1222. In making the determination, you must do the following.
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Consider any information reported on a transfer statement.
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Consider any information reported on Form 8937.
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Apply the rules for stock acquired from a decedent.
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Apply the rules for stock acquired as a gift.
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If a customer acquired securities that caused a loss from a sale of other securities to be both nondeductible under section 1091 and reported in box 5 of an earlier Form 1099-B, use the rules in section 1223(3) to determine the holding period of the acquired securities.
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In the case of a short sale, report whether any gain or loss on the closing of the short sale is short-term or long-term based on the acquisition date of the security delivered to close the short sale. Apply the rule in section 1233(d), if applicable.
You are not required to consider other transactions, elections, or events occurring outside the account when determining whether the gain or loss on the sale is short-term or long-term. You are also not required to apply section 1259 (constructive sales), 475 (mark-to-market method of accounting), 1092 (straddles), 1233(b)(2) (short sales), 1296 (mark-to-market method of accounting for marketable stock in a passive foreign investment company), 852(b)(4)(A), 857(b)(8), 852(b)(4)(B) (regulated investment company and real estate investment trust adjustments), and Regulations section 1.1221-2(b) (hedging transactions).
Enter the aggregate gross cash proceeds from all dispositions of securities (including short sales), commodities, or forward contracts. Show a loss, such as one from a closing transaction on a forward contract, as a negative amount by enclosing it in parentheses.
You may, but are not required to, reduce gross proceeds by commissions and transfer taxes, if that is consistent with your books. For securities sold because of the exercise of an option granted or acquired before 2013, you may, but are not required to, take into account option premiums in determining gross proceeds if that is consistent with your books. If you reduce gross proceeds by commissions, transfer taxes, or option premiums, check the second box in box 2a. Otherwise, check the first box.
Do not include amounts shown in boxes 9 through 12.
If identical stock is sold at separate times on the same calendar day by a single trade order and a single confirmation is given that reports to the customer an aggregate price or an average price per share, you can determine gross proceeds by averaging the proceeds for each share. However, do not do this if the customer notifies you in writing of an intent to determine the proceeds from the sale by the actual proceeds per share and you receive that notification by January 15 of the calendar year following the year of the sale. You may extend the January 15 deadline but not beyond the due date for filing Form 1099-B.
Do not include any accrued interest on bonds sold between payment dates (or on a payment date) in this box. Instead, report, this accrued interest on Form 1099-INT.
For reporting an acquisition of control or substantial change in capital structure, see page 2.
See Acquisition of control or substantial change in capital structure, earlier.
Enter the adjusted basis of any securities sold unless the security is not a covered security and you check box 6a. If you check box 6a and are not reporting basis, leave box 3 blank. Enter “0” in box 3 only if the securities sold actually had a basis of zero.
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A specified security (defined next) acquired for cash in an account after 2010, except stock for which the average basis method is available.
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Stock for which the average basis method is available and that is acquired for cash in an account after 2011.
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A specified security transferred to an account if the broker or other custodian of the account receives a transfer statement (explained earlier) reporting the security as a covered security.
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A security acquired due to a stock dividend, stock split, reorganization, redemption, stock conversion, recapitalization, corporate division, or other similar action, if the basis of the acquired security is determined from the basis of a covered security.
A specified security is any share of stock (or any interest treated as stock, such as an American Depositary Receipt) in an entity organized as, or treated for federal tax purposes as, a corporation (foreign or domestic). For this purpose, a security classified as stock by the issuer is treated as stock. If the issuer has not classified the security, the security is not treated as stock unless the broker knows that the security is reasonably classified as stock under general federal tax principles.
The following securities are not covered securities.
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Stock acquired in 2011 that is transferred in 2011 to a dividend reinvestment plan that meets the requirements of Regulations section 1.1012-1(e)(6). However, a covered security acquired in 2011 and transferred to a dividend reinvestment plan after 2011 remains a covered security. For purposes of this rule, stock is considered transferred to a dividend reinvestment plan if it is held in a plan that is not a dividend reinvestment plan and the plan amends its plan documents to become a dividend reinvestment plan. The stock is considered transferred as of the effective date of the plan amendments.
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A security acquired due to a stock dividend, stock split, reorganization, redemption, stock conversion, recapitalization, corporate division, or other similar action, if the basis of the acquired security is determined from the basis of a noncovered security.
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A security that, when acquired, did not have to be reported on Form 1099-B because it was acquired from an exempt recipient or an exempt foreign person as defined in Regulations section 1.6045-1(g)(1).
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A security for which reporting is required by Regulations section 1.6049-5(d)(3)(ii) (certain securities owned by a foreign intermediary or flow-through entity).
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Any shares for which the acquisition date is unknown.
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The shares that were acquired first, whether they are covered or noncovered securities.
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Stock in most mutual funds or other regulated investment companies.
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Stock acquired after 2010 in connection with a dividend reinvestment plan that meets the requirements of Regulations section 1.1012-1(e)(6).
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The customer elects that method, or
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You choose the average basis method as your default method, and the customer does not give you any other instructions.
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The initial basis (defined next) as of the date the security is acquired in an account, plus
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The commissions and transfer taxes related to the sale to the extent not accounted for in gross proceeds.
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The total cash paid by the customer or credited against the customer's account, plus
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The commissions and transfer taxes to buy the security.
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Take option premiums into account to determine the initial basis of securities acquired by exercising an option granted or acquired before 2013, or
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Increase initial basis for income recognized upon the exercise of a compensatory option or the vesting or exercise of other equity-based compensation arrangements granted or acquired before 2013.
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The stock was purchased at separate times on the same calendar day in executing a single trade order, and
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The broker executing the trade provides a single confirmation to the customer that reports an aggregate total price or an average price per share.
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Neither gain or loss is recognized because of the basis rules for gift property, or
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The initial basis depends on fair market value as of the date of the gift and you neither know nor can readily ascertain this value.
Example.
Your customer Fred buys 100 shares of covered stock in MNO Corporation for $5,000 in February 2012. MNO Corporation merges with PQR Corporation in December 2012. The merger is taxable only to the extent that boot is received. Fred receives 100 shares of PQR stock with a value of $4,700 and $800 cash boot in exchange for his MNO stock. Fred's resulting basis in the PQR stock is $4,700. Report the $800 cash boot in box 2a, and report $300 in box 3 to reflect the net reduction in basis from $5,000 (for the MNO stock) to $4,700 (for the PQR stock).
Enter backup withholding. For example, persons who have not furnished their TIN to you in the manner required are subject to withholding on certain amounts required to be reported on this form. This is called backup withholding. For more information on backup withholding, including the rate, see Part N in the 2012 General Instructions for Certain Information Returns.
Use Form W-9 to request the TIN of the recipient. For foreign recipients, request the recipient complete the appropriate Form W-8. See the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY.
Report any loss disallowed under section 1091 only if both the sale and purchase transactions occur in the same account with respect to covered securities with the same CUSIP number. You are permitted, but are not required, to report in box 5 all loss disallowed under section 1091. For example, you may report a disallowed loss even though a security is sold in one account and repurchased in a different account. Increase the adjusted basis of the acquired securities by the amount of the disallowed loss reported in box 5.
You also do not have to apply the wash sale rules if:
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The purchased security is transferred to another account before the wash sale,
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The purchased security was purchased in another account and later transferred into the account from which securities were sold,
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The securities are treated as held in separate accounts, or
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The customer has notified you in writing (including in an electronic format) that he or she has made a valid and timely mark-to-market election under section 475 and identifies the account from which the securities were sold as containing only securities subject to the election.
For more details, see Regulations section 1.6045-1(d)(6)(iii).
Example.
Your customer Joe buys 100 shares of covered securities for $1,000 in September 2012. In October 2012, he sells them for $600. Within 30 days of the sale, he buys 75 shares with the same CUSIP number in the same account. Since his loss is $400 ($1,000 minus $600) but the loss on 75 shares is disallowed, his disallowed loss is $300. Report the $600 gross proceeds from the sale in box 2a, $1,000 basis in box 3, and $300 wash sale disallowed in box 5.
You may check the box if reporting the sale of a noncovered security. Do not check this box if reporting the sale of a covered security.
If you check this box, you do not have to complete boxes 1b, 1c, 3, and 5, and you do not have to check box 6b. If you check box 6a and choose to complete boxes 1b, 1c, 3, and 5, you are not subject to penalties under section 6721 or 6722 for failure to report boxes 1b, 1c, 3, and 5 correctly. If you do not check box 6a, you are subject to penalties under sections 6721 and 6722 for failure to report boxes 1b, 1c, 3, and 5 correctly even if you are reporting the sale of a noncovered security.
Check this box if:
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You are not checking box 6a, or
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You are checking box 6a but are reporting basis to the IRS in box 3 anyway.
Enter the gross amounts received by a member or client of a barter exchange. This includes cash received, the fair market value of any property or services received, and the fair market value of any trade credits or scrip credited to the member's or client's account. However, do not include amounts received by a member or client in a subsequent exchange of credits or scrip. Do not report negative amounts.
Enter a brief description of the disposition item (for example, 100 shares of XYZ Corp. stock). If necessary, abbreviate the description so that it fits within box 8.
For bartering transactions, describe the services or property provided.
For regulated futures contracts and forward contracts, enter “RFC” or other appropriate description.
See Acquisition of control or substantial change in capital structure, earlier, for the information to enter in box 8 for that type of transaction.
If you complete boxes 9 through 12, do not complete any other numbered box except box 8 and, if applicable, box 4.
Enter the profit or (loss) realized by the customer on closed regulated futures or foreign currency contracts in 2012.
Enter the unrealized profit or (loss) on open regulated futures or foreign currency contracts at the end of 2011.
Enter the unrealized profit or (loss) on open regulated futures or foreign currency contracts at the end of 2012.
Enter the aggregate profit or (loss) for the year from regulated futures or foreign currency contracts. Use boxes 9, 10, and 11 to figure the aggregate profit or (loss).
Enter the two letter postal abbreviation of the state for which state income taxes are being withheld.
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