As part of the new cost basis reporting requirements, you will no longer enter your sales proceeds directly on Schedule D for Capital Gains and Losses. You will need to fill out up to three sets of a new form entitled "Form 8949 Sales and Other Dispositions of Capital Assets" and then carry the totals forward to Schedule D. A separate Form 8949 must be used to report each of these three types of long-term and short-term gains/losses:
1. Securities with both sales proceeds and cost basis reported on Form 1099-B.
2. Securities with only sales proceeds reported on Form 1099-B and cost basis not reported.
3. Sales of securities not falling under type (1) or (2).
The columns on Form 8949 resemble the former Schedule D except for two new items:
1. A code must be entered to indicate the reason for any adjustment to cost basis.
2. Adjustments to the cost basis reported on Form 1099-B by your broker must be reported.
The form is particularly confusing because if the broker/dealer has reported the wrong cost basis on your Form 1099-B, you do not actually enter the amount of the correct cost basis directly on the form. You are supposed to first enter the wrong basis reported by the broker and then enter the difference between the correct basis and the wrong basis.
This convoluted approach is sure to lead to confusion on the part of individual taxpayers. Many people will also get the positives and negatives reversed and end up misstating the adjustment. Always cross check that the columns add to the correct gain or loss.
Information provided is intended solely for cash-basis U.S. citizen individual taxpayers and is believed to be accurate for most cases but is not guaranteed. Always consult your personal tax advisor about your own situation. Suggestions are most welcome. Please email our webmaster @ costbasis.com with your comments. If this website has been helpful to you, please consider making a donation to support our efforts.