What Is Form 1099-B?
The Internal Revenue Service, which is responsible for collecting and processing tax payments in the United States, uses the 1099 form series to record income other than salaried wages. Form 1099-B is specifically for reporting income from brokered or bartered transactions, such as the sale of stocks or bonds. A broker or brokerage firm is required to send a Form 1099-B to each person for whom he has processed a sale.
Taxpayers who receive a Form 1099-B must file a 1040 Form instead of a 1040EZ Form. They also must complete a Schedule D form, which outlines capital gains and losses, including those listed on the 1099-B. Any taxable income from the sale of a brokered asset, such as stocks, bonds or commodities, must be reported on Schedule D, even if it does not appear on the 1099-B Form.
The 1099-B Form outlines income from the sale of brokered or bartered assets during the previous calendar year. The completion date of a sale determines the year in which it should be reported. For example, a sale that completes on January 1, 2010, applies to the 2010 tax year and would appear on the Form 1099-B sent in 2011.
All brokers must file Form 1099-B for each sale they brokered during the previous calendar year. Multiple sales on behalf of the sale seller can be combined onto one form. The form must be filed with the Internal Revenue Service and a copy must be sent to the seller by February 15 of the following year.
In order to complete Form 1099-B, a broker must know the seller's name, address and social security number. The form details the number of shares sold, the class of stock sold, the amount of taxes already withheld and the aggregate profit or loss from the sale. Sellers who complete sales with multiple brokers during the same calendar year will receive multiple 1099-B forms.
Form 1099-B also covers bartered goods and services. Any exchange of services, goods or property must be reported. A separate form should be filed for each barter exchange. Certain exchanges of services between individuals should be filed on Form 1099-MISC instead.
The profits and losses listed on Form 1099-B ultimately affect the amount of tax an individual owes for a given tax year. These profits or losses are itemized in Schedule D and used in the 1040 Form. Profits may increase the amount of taxable income while losses may decrease the total amount on which one pays taxes.
Written by Marina Martin
