Cost basis is the original monetary amount paid for shares of a security. When you sell or exchange shares of mutual funds or other securities, you may have a capital gain or loss that must be reported to the IRS.

What was the basis reported to the IRS on Form 1099 B Box 12?

Each section is included on your Form 1099-B only if it’s relevant to the activity in your account. Short-term transactions for which basis is reported to the IRS. Box 2 is labeled “Short-term,” and Box 12 is labeled “Basis reported to IRS.” Report on Form 8949, Part I, with Box A checked.

What is the purpose of form 8949?

Purpose of Form. Use Form 8949 to report sales and exchanges of capital assets. Form 8949 allows you and the IRS to reconcile amounts that were reported to you and the IRS on Forms 1099-B or 1099-S (or substitute statements) with the amounts you report on your return.

Who should file Form 8949?

Anyone who sells or exchanges a capital asset such as stock, land, or artwork must complete Form 8949. Both short-term and long-term transactions must be documented on the form.

How are single stock futures reported on IRS Form 8949?

Single stock futures (defined by the IRS as Securities Futures Contracts) are exempt from Form 1099-B reporting and thus are typically not reported by brokers on that form, however, they usually are reported on Form 8949. Single stock futures (securities futures contracts) are NON-COVERED securities

How to report a sale on form 8949?

Enter the totals directly on Schedule D, line 1a; you aren’t required to report these transactions on Form 8949 (see instructions). You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box.

How is the basis reported on a stock sale?

The basis reported omits the “compensation” element of the sale and therefore the “compensation” gets reported twice if you enter the 1099-B as it reads, once via the W-2 and then again on the sale of the stock. Clearly the “fix” here is to add back the compensation element to the basis of the stock being sold.

How does selling stock affect your tax basis?

However, the commissions you pay when you sell stock don’t increase tax basis. Instead, these sales expenses reduce the capital gain (or increase the capital loss) that you calculate on Form 8949, which the IRS requires along with Schedule D when you file your taxes.