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What’s the Cost? Referencing Form 1099-B in Determining Short-Term/Long-Term Capital Gains and Losses

April 18, 2023 (2 min read)

Brokerages have historically used Form 1099-B to report a taxpayer’s sale of securities. Since 2011, the IRS requires brokerage firms to report on Form 1099-B (or a substitute statement) the cost basis of securities sold or exchanged by the taxpayer and the type of capital gain (short-term or long-term). I.R.C. § 6045B and regulations. IRS Publication 550 offers taxpayers detailed guidance on how to calculate cost basis under different circumstances, which is essential in determining a taxpayer’s taxable profit or loss on the sale of most securities. Learn more about cost basis reporting by reading this practice note.

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