A Guide About Form 1099-B: Proceeds From Broker and Barter Exchange Definition

Feb 01, 2024 By Triston Martin

In the case of a broker or barter transaction, you will be sent a Form 1099-B: Proceeds From Broker and Barter Exchange Definition. Capital gains and losses are often recorded on Form 8949 or a Schedule D. Whenever a taxpayer sells any capital asset like stocks, bonds, or even the sale of your primary residence, capital gains and losses are generated. In cases when a CSV file cannot be imported, and you have a number of transactions, you may either input each one individually or aggregate them all together as a single transaction if they all pertain to the same business and are of varying lengths of time and duration.


You must have two or three different Capital Gain & Loss Item records for various short-term, long-term covered, and long-term noncovered transactions when you group them together. The transactions on your 1099-B should already be split down into these sums. If your asset's cost basis is disclosed to the IRS by a financial institution, it is considered a covered asset. It's noncovered if a financial institution failed to declare the cost basis to the IRS. Box 12 of your 1099-B should be ticked or blank if this is covered, and it should be reported to you (noncovered).


IRS Definition


The Form 1099-B, Proceeds From the Broker as well as Barter Exchange Transactions, must be submitted by a broker or barter exchange for each of the following individuals:


  • A list of customers for whom the broker has sold (particularly short sales) commodities, futures, stocks, forward contracts, options, foreign currency contracts, securities futures contracts, debt instruments, etc., for cash.
  • A broker who has cause to believe that a company has received cash, stock, or even other property from a company that has had its shares acquired in an acquisition of control or has had a major change in capital structure notifiable on Form 8806; or
  • Who used a barter exchange to trade goods or services?


Barter Trades



Reporting barter exchange transactions is another secondary purpose for Form 1099-B. As the name suggests, bartering is the practice of exchanging goods and services without the use of money. All commodities and services acquired by an individual participant in barter exchange are reported in Box 13, which is used to calculate their fair market value. A barter exchange's value is generally considered income as well as may be subject to taxation.


It doesn't matter whether you own stock, bonds, ETFs, or cryptocurrencies; TurboTax Premier gets you covered. Stock transactions across hundreds of Financial Institutions and over 4,000 crypto transactions from the main crypto exchanges may be readily imported by financial institutions. As you file your taxes, you'll learn more about the ins and outs of the tax code.


Who Is Eligible to File Form 1099-B, That Proceeds from a Broker or Barter Exchange?



All Brokers must have to submit the 1099-B form for every client who sells stocks, commodities, alternatives, or even other assets throughout the course of the tax year and provide a copy to the customer. The form is required by the IRS to keep track of a taxpayer's profits and losses, and it must be submitted. In January and February, investors get forms.


Let's say you sold a number of stocks last year, for example. The transaction brought in $10,000. A 1099-B from the brokerage and a report about a taxable capital gain from you will both be sent to the Internal Revenue Service. Companies that engage in specific bartering activities may also complete the form. For the latter, the form reports changes in a company's capital structure or control.


Other Relevant Forms


A Schedule D must be filed if you get a 1099-B. This is where you keep track of your year-end profits and losses. Details of transactions are recorded on Form 8949: Sales & Other Disposition of Capital Assets.


What Is the Purpose of Form 1099-B?


An individual's capital gains and losses are reported on Form 1099-B once an asset is sold via a broker or barter exchange. The IRS and the investor both get a separate form for each transaction from these companies.


What Is the Best Way to Report Form 1099-B to the IRS?


The information on Form 1099-B must be reported as capital gains or losses on Schedule D and/or Form 8949.


Form 1099-B: How Do You Read It?


Form 1099-B includes both your and the issuer's information. In addition, it contains information on the sold property, such as its description, purchase date, selling date and price, and the original purchase price, as well as any applicable deductions. Other data includes any federal taxes withheld, profits or losses accrued, and state taxes withheld.


Conclusion


Form 1099-B will be sent to you in January if you sell stocks, bonds, derivatives, or other assets via a broker. This form is being used to record any profits or losses that occurred in the previous year as a result of such transactions. Members of bartering networks may also be given a copy of the form.

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