When to file 1099-B Form

When to file 1099-B Form: What You Should Know

If you sell shares of a stock on your broker's exchange, use Form 1099-B to report this transaction. If you sell commodities or debt instruments, use the Form 1099-B to report the transaction. If you sell foreign currency and have an outstanding bill of exchange that is payable to a foreign country, report the purchase of such currency on a Form 1099-B. Example: If you sold 1,500 shares of stock on a New York Stock Exchange (NYSE) exchange for 2,000, then you did not sell the securities for anything in real money. You bought them for nothing as “Brokers' Securities.” Your gain or loss from that purchase is 100. Now, you would report 100 as taxable income and 5,000 as a charitable contribution for U.S. foreign charities.  If you bought such securities on an IRS-facilitated online market (such as through Trade) and held them the entire time, then such transactions are treated as short-term barter transactions. The IRS will send you Form 1099-B showing your gain or loss from this transaction. If you purchased such securities via an electronic market (e.g., through Trade) in cash, you would report the transaction in the year of sale. The gain or loss from such purchase generally would be taxed at the greatest of the tax rate for such a short-term barter transaction, or the tax rate for the year you sold them. Example: You bought 3,500 shares of stock on a New York Stock Exchange (NYSE) or NYSE Area exchange and held them the entire time. The NYSE Area or NYSE NY WTC exchange is a short-term electronic market. This transaction is considered to be a barter transaction with each share of stock costing 2.01 each, and thus the gain or loss would be taxed at the least of the ordinary income tax rate, or the tax rate based on the current tax year's tax basis for your 3,500 shares of stock (the current year is the calendar year to reflect the tax basis of your 3,500 shares of stock). If your NYSE NY WTC exchange is a designated market for trading shares of U.S. treasury securities (which is why it carries the label “Treasury”), then you are required to file Form 8829, and you would also report the gain or loss in the year of sale.

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