IRS Form 1099-B Questions

The 1099-B is one of many tax forms that may be needed to complete tax Form 1040.

Tax forms created by the Internal Revenue Service (IRS) include a number of 1099 forms for reporting various types of income not considered standard wages and salaries. One in particular, the Form 1099-B, "Proceeds From Broker and Barter Exchange Transactions," provides profit and loss information on specific types of investments for investors to report on their annual tax returns. Even though brokerages and barter exchanges distribute the forms to taxpayers and file with the IRS, ultimately the responsibility for obtaining and reporting the pertinent information falls to the taxpayer.

Who is Required to File Form 1099-B?

According to IRS instructions for federal tax form 1099-B, a broker must file Form 1099-B for each individual for whom they have sold stocks, bonds and other financial instruments during the prior tax year. In addition, a broker must file Form 1099-B with the IRS in situations where a publicly traded company has undergone a major restructuring of its capital assets that affects stockholders. A barter exchange must file the form for anyone for whom the company exchanged property or services.

A barter exchange is an individual or company that provides services to clients by facilitating the exchange of property or services among its members. Property transfers through a barter exchange may include bonds, commodities, futures (stocks or property to be delivered at a later date) and both common and preferred stocks, among others. Fair market value of the bartered property must be reported to the IRS.

Should I Attach Form 1099-B to My 1040?

Brokers and barter exchanges required to file Form 1099-B generally do so in triplicate, sending one copy to the IRS, one copy to the taxpayer and retaining one copy for their internal files. Thus, the taxpayer does not attach the actual Form 1099-B to his federal income tax return forms, but, instead, transfers pertinent information contained therein to the appropriate IRS forms.

Where Do I Include 1099-B Information on My Return?

Information contained on Form 1099-B that should be reported to the IRS varies somewhat by individual circumstances. However, any information contained in Box 2 of the form, reporting cash totals from transactions involving financial instruments, generally should be reported on Form 1040, Schedule D, "Capital Gains and Losses." Cumulative totals of profits or losses on foreign currency and futures contracts shown in Box 11 of the form go on federal Form 6781. Amounts shown in Box 3, showing profits in cash or property through a barter exchange, may need to be reported to the IRS depending on the individual's tax situation.