In 2011, the IRS revised Schedule D and created a new tax form, Form 8949, for reporting capital gains and losses. For a given tax year, the information on Form 8949 covers all sales and exchanges of capital assets, including stocks, bonds, mutual fund and options regardless of the date they were purchased. It must be included with Schedule D, which contains the summary of all capital gains and losses.
Form 8949 includes two separate parts for reporting long-term and short-term gains and losses.
· Part I for reporting short-term capital gains and losses
· Part II for reporting long-term capital gain and losses
Short-term sales transactions are further broken down into the following categories:
· A – Sales of covered securities for which cost basis is provided to the IRS on Form 1099-B
· B – Transactions reported on Form 1099-B but basis is not reported to the IRS
· C – Sales of securities for which no Form 1099-B is received.
Long-term sales transactions are further broken down into the following categories:
· D – Sales of covered securities for which cost basis is provided to the IRS on Form 1099-B
· E – Transactions reported on Form 1099-B but basis is not reported to the IRS
· F – Sales of securities for which no Form 1099-B is received
The following parameters are used to derive the information on the Form 8949
· Realized activity within the account and within the date range for all taxable accounts is harvested.
· Section 1256 transactions that result in gain/loss are excluded from the realized activity on the Form 8949 Report. This information will continue to be reported on Form 6781.
· Since the Broker 1099-B information is not provided to GainsKeeper, the covered status of each closed lot in the realized report is determined by a set of base assumptions using characteristics from the transactions and security.
· The cost, gain/loss and wash sale deferrals of closed sublots are aggregated in accordance with current rules. Investor aggregation and reporting rules may differ from the Broker’s aggregation and reporting obligations.
Form 8949 is formatted to report each transaction captured on Form 1099-B on a separate line.
Form 8949 Report Example
In the following Form 8949 example, the highlighted section below shows a W in column F, indicating that there was a wash sale adjustment. The amount of the adjustment displays in column G.
Although based on current information generally available, general assumptions may be made by WKFS and implemented in the GainsKeeper® service which may not take into account potentially important considerations to specific taxpayers. Therefore, the views and information presented by the GainsKeeper® service may not be appropriate for you. WKFS does not provide investment advice, investment management or legal or tax advice. You should consult with your own legal and tax advisors and you (not WKFS) are solely responsible for any tax, tax penalties, or interest related to your tax returns. You agree that WKFS has no liability for any damages resulting from any error in data provided by you or from any third party vendor that is provided to the GainsKeeper® service. You may wish to consult independent sources with respect to tax lot reporting.