If you clear trades, maintain customer accounts, or run a barter exchange, you’re responsible for reporting sales and redemptions of securities and certain barter transactions to customers and the IRS. This guide walks you through who must file, what information to collect, how to determine basis and holding period, key deadlines, and how to avoid common errors when preparing Form 1099-B information returns.
If you need broader background on 1099 forms, filing timelines, or electronic filing options, it helps to review those requirements alongside the specific rules for Form 1099-B.
What the 1099-B Reports
The 1099-B reports proceeds from broker and barter exchange transactions. For securities, it typically includes the date acquired and date sold, proceeds, cost basis for covered securities, whether basis was reported to the IRS, and whether the gain or loss is short-term or long-term.
For barter exchanges, it reports the gross value of property or services exchanged. Taxpayers use these details to complete Schedule D and Form 8949 with their individual returns.
For official guidance, see the IRS About Form 1099-B page and the IRS Instructions for Forms 1099-B and 1099-S.
Who Must File and Who Receives the Statement
- Who files: Brokers, including clearing organizations, that handle sales or redemptions of securities, commodities, options, and regulated futures contracts, as well as operators of barter exchanges.
- Who receives: Each customer with a reportable transaction during the calendar year, including individuals, partnerships, estates, and trusts. Corporations also receive statements in many cases, unlike some other information returns.
- Exclusions: Some transfers between accounts at the same firm, certain non-cash corporate actions, and de minimis activity may be out of scope. You should confirm treatment using the current IRS instructions for 1099-B.
Key 2026 Deadlines
Your 2026 filing calendar matters. Missing either the recipient deadline or the IRS filing deadline can create correction work and potential penalties.
Electronic filing is generally required if you have 10 or more total information returns across all types for the year under the aggregate threshold. If e-filing creates undue hardship, consider requesting a waiver by the IRS deadline.
You can review broader annual filing dates on BoomTax’s 2026 filing deadlines resource.
Information You’ll Need to Gather
- Payer details: legal name, address, TIN, and contact information.
- Customer details: name, address, TIN, account number, and whether the customer is exempt from backup withholding.
- Security identifiers: CUSIP or other identifiers, plus a description of the property.
- Transaction details: dates acquired and sold, quantity, proceeds, cost basis, and adjustments such as wash sales, market discount, option premiums, return of capital, and corporate actions.
- Holding period classification: short-term or long-term.
- Basis reporting status: whether basis was reported to the IRS for covered versus noncovered securities.
- Federal income tax withheld: backup withholding, if any.
- State information: state ID, withholding, and any state-specific filing requirements, if applicable.
Step-by-Step: From Data to Filed Return
- Confirm you must file. If you acted as a broker or operate a barter exchange and had reportable transactions, you must file Form 1099-B for each customer.
- Solicit and validate TINs. Request Form W-9 from each customer. Use the IRS TIN Matching Program to reduce mismatches and backup withholding notices.
- Aggregate transactions by reporting category. Group sales by short-term versus long-term and by whether basis is reported to the IRS. Many firms also issue a consolidated statement, but each 1099-B record must still follow IRS reporting rules.
- Calculate cost basis and adjustments. Include commissions and fees in basis or proceeds according to your firm’s policy and IRS guidance. Apply wash sale rules and other required adjustments.
- Determine covered versus noncovered status. Covered securities generally include most stock acquired in 2011 or later, mutual fund shares and DRIP shares in 2012 or later, and specified debt options in later years. Covered securities require reporting basis to the IRS. Noncovered securities require basis to the customer but not to the IRS.
- Classify holding periods. A transaction is short-term if held one year or less and long-term if held more than one year. Special rules apply to certain contracts and regulated futures.
- Prepare customer statements. Furnish clear, consolidated statements by the deadline. Label adjustments and footnote complex events such as spin-offs and mergers so customers can reconcile to Form 8949.
- Choose your filing method. E-file through the IRS FIRE system, or a successor platform if announced. Secure a TCC, follow Publication 1220 file layouts, run test submissions if required, and retain confirmation records.
- Handle state reporting. Verify whether your state participates in the Combined Federal/State Filing program or requires separate submission.
- Retain records and monitor corrections. Keep source data and confirmations for at least four years. Establish a process for customer inquiries and corrections.
Special Notes for Barter Exchanges
A barter exchange is an organization that maintains accounts for members and facilitates the exchange of goods or services. You must report the fair market value of credits or property/services provided to each member as gross proceeds.
Backup withholding rules and TIN solicitation also apply to barter exchange members.
Cost Basis and Holding Period: Practical Rules
- Covered vs. noncovered: For covered securities, report basis and holding period to both the customer and the IRS. For noncovered securities, report to the customer only.
- Adjustments: Reflect wash sale disallowed losses, return of capital, corporate actions, bond premium or amortization, and option premiums.
- Commissions and fees: Include them in basis or adjust proceeds, but be consistent and follow IRS instructions.
- Reinvested distributions: Reinvested dividends increase basis, so track them lot by lot for accurate gain or loss reporting.
- Lot relief methods: Use specific identification, FIFO, or average cost where permitted. Document the customer’s elections and apply them consistently.
E-Filing, Paper Filing, and Thresholds
Most filers must e-file because of the low aggregate threshold of 10 or more total information returns. To e-file, register for a TCC, follow Publication 1220 formatting, and submit through the FIRE system unless the IRS announces a new platform covering 1099-B before the season.
Paper filing requires machine-readable red forms and separate Form 1096 transmittals. If technology or connectivity is a barrier, you can request a waiver and should keep documentation supporting any waiver or hardship exception.
If you want help understanding electronic filing workflows, BoomTax’s 1099 e-filing resource is a useful starting point. For general filing instructions, the IRS also provides the IRS General Instructions for Certain Information Returns.
Common Mistakes and How to Avoid Them
Corrections and Customer Inquiries
If you discover errors after furnishing or filing, issue a corrected statement to the customer and submit a corrected file to the IRS as soon as possible. Follow the two-step correction process if instructed, such as first voiding or zeroing the incorrect record and then submitting the correct record.
Keep a log of customer inquiries and resolutions, and retain documentation supporting the change, such as revised corporate action data. You can also review BoomTax’s guide to 1099 corrections for a broader correction workflow.
Penalties and How to Minimize Risk
Penalties apply for late, incorrect, or missing returns and for failing to furnish statements to customers. Amounts are indexed annually and vary based on how late the filing is, with higher penalties for intentional disregard.
- Validate TINs and apply backup withholding when required.
- Automate lot tracking and corporate action adjustments.
- Use pre-filing validations and small-scale test submissions.
- Document policies for proceeds, fees, and lot relief methods.
- Assign owners for each step: data intake, reconciliation, review, e-file transmission, and post-filing support.
For more detail on exposure and timing, see BoomTax’s overview of 1099 penalties.
Worked Examples
Example 1: Stock Sale With Reinvested Dividends
A customer buys 100 shares at $20 for $2,000 and pays a $10 commission, creating a $2,010 basis. Over the year, two $50 dividends are reinvested to buy additional shares, so basis increases by $100.
Later, the customer sells all shares for $2,400 and pays a $10 sell commission. Total basis is $2,110, proceeds are $2,390 if commissions reduce proceeds, and the reported gain is $280, adjusted for any wash sales or corporate actions.
Example 2: Wash Sale
The customer sells 50 shares at a $200 loss on March 1 and buys substantially identical shares within 30 days. The $200 loss is disallowed and added to the basis of the replacement shares.
Report the wash sale adjustment on the statement and in the appropriate adjustment field.
Example 3: Barter Exchange
A member provides marketing services valued at $800 and receives exchange credits. Report $800 as gross proceeds to the member.
If the member did not provide a TIN, impose and report backup withholding.
Filing Checklist
- Confirm filer status as a broker or barter exchange.
- Collect W-9s and validate TINs, then determine backup withholding.
- Compile trades by lot and compute basis, proceeds, and adjustments.
- Assign short-term versus long-term and covered versus noncovered status.
- Prepare and review customer statements, then furnish them by February 17, 2026.
- E-file through FIRE by March 31, 2026, or paper file by March 2, 2026 if eligible.
- Complete all state reporting obligations.
- Implement a corrections workflow and retain records.
FAQs
Do I need customer basis for noncovered securities?
Yes. Provide basis to the customer when available, but you generally do not report that basis to the IRS for noncovered securities. Covered security basis must be reported to both the customer and the IRS.
Can I issue a consolidated year-end tax statement?
Yes, many brokers do. Just make sure the 1099-B components meet IRS formatting and content rules and remain reconcilable to the customer’s Form 8949.
What if my customer refuses to provide a TIN?
Begin backup withholding at 24% and continue soliciting a valid TIN. Report the withholding on the information return and remit it under IRS deposit rules.
How long should I keep records?
Maintain records supporting the returns, including basis and adjustments, for at least four years, or longer if required by your regulator or firm policy.
Bottom Line
With accurate data, clear lot tracking, and disciplined deadlines, filing Form 1099-B can be straightforward. Start early, validate TINs, document your basis and adjustment methods, and use e-filing with pre-submission checks to reduce corrections and penalties.
This article is for general informational purposes and is not legal or tax advice. Always consult the latest IRS instructions and applicable regulations, and consider professional advice for your specific situation.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.
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