1099-B Proceeds from broker and barter exchange reporting is made up of four separate sub-sections on the 1099-B Summary Page. The first three sections are separated based upon cost basis reporting regulations, while the fourth section includes Regulated Futures, Section 1256 contracts.
IRS regulations classify covered and noncovered securities as outlined in the table below:
|Covered Securities||Uncovered Securities|
|Broker/dealer vs. Tax Payer Responsibility||Brokers/dealers report cost basis to IRS and taxpayer on Form 1099-B. Taxpayer will use From 1099-B data to prepare their tax returns.||Taxpayer to maintain and report cost basis to IRS. Includes assets designated as noncovered due to asset type or incomplete cost basis information.|
|Equities||Acquired on or after January 1, 2011||Acquired prior to January 1, 2011
|Mutual Funds||Acquired on or after January 1, 2012||Acquired prior to January 1, 2012|
|Fixed Income and options||Acquired on or after January 1, 2014||Acquired prior to January 1, 2014|
Transaction details appear following the Consolidated Forms 1099- Summary page. Boxes 1d to 1g of the 1099-B report the combined total for securities classified within sections one through three. Interactive Brokers includes cost basis reporting to the IRS for covered securities. Noncovered securities are exempt from broker cost basis reporting due to either designation or unknown information.
Section one reports proceeds and cost basis information for covered securities with a short-term gain or loss. Grouped by their unique security identification number (CUSIP or ISIN), these covered securities correspond with the Worksheet for Form 8949 Part I Short-Term Capital Gains and Losses - Assets Held One Year or Less, Box A.
Box 1e reflects the original or adjusted cost basis. If applicable, a cost basis adjustment code may appears under Box 1f within the section's transaction details that follow the Summary.
Section two reports information for transactions of covered securities with a long-term gain or loss. Also grouped by security identification number, these assets correspond with the Worksheet for Form 8949 Part II Long-Term Capital Gains and Losses - Assets Held More Than One Year, Box D.
Section three reports transaction of non-covered securities including index options without determination of holding period. Securities under this section include transactions for which the cost basis is not known or not reportable by Interactive Brokers to the IRS. Based on personal records, the taxpayer must report the cost basis and determine the short or long term.
These assets correspond with the Worksheet for Form 8949 Part I Short-Term Capital Gains and Losses, Box B, as well as Part II Long-Term Capital Gains and Losses, Box E.
We are required to report the aggregate profit/loss in four components under Boxes 8 to 11, even though taxpayers only report the aggregate profit/loss from regulated futures.
All settled or closed contracts during the tax year are displayed in Box 8. Any unrealized profit or loss at the beginning of the year (Box 9) and at the end of the year (Box 10) is adjusted from Box 8 to report an aggregate profit or loss on all contracts, open or closed, in Box 11.
For a contract level profit and loss summary, we include a Gain/Loss Worksheet for 1256 Contracts as part of our Year End Reports. There is one section for Futures and one section for Options.
IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.