Form 8949

What Is a Form 8949?

Form 8949, officially titled "Sales and Other Dispositions of Capital Assets," is a United States federal tax form used to report each sale or exchange of a capital asset, such as stocks, bonds, mutual fund shares, or other investments. It is filed with an individual's federal income tax return, usually alongside Schedule D, which summarizes the results.

How the Form Works

Each transaction is entered on its own line with several pieces of information: a description of the asset, the date acquired, the date sold, the sale proceeds, and the cost basis. The difference between proceeds and basis, after any adjustments, is the capital gain or capital loss for that sale.

Transactions are grouped by holding period:

• Short-term transactions, held one year or less, appear in Part I.
• Long-term transactions, held more than one year, appear in Part II.

Within each part, checkboxes indicate whether the broker reported the cost basis to the IRS on Form 1099-B and whether the transaction is covered by that reporting. Totals from both parts flow to Schedule D.

Adjustments and an Example

Some transactions need corrections to the reported figures. For example, a wash sale disallows a loss, and the adjustment is entered in a separate column using a code. Broker statements often already include this information, but the figures can be compared with personal records.

Suppose an investor buys 100 shares of a stock for a total of $1,000 and sells all of them 18 months later for $1,400. Because the holding period exceeds one year, the $400 gain is entered in Part II as a long-term transaction, with proceeds of $1,400 and a basis of $1,000.

Why It Matters to Investors

Form 8949 provides the detail behind the net capital gain or loss reported on the tax return. Investors with many trades, or with transactions that lack broker-reported basis, often need to complete it carefully, since the IRS compares these entries with information returns it receives from brokers.