The NASPP Blog

With the new Forms 1099-B that will be issued for the first time next year, the process for reporting sales of stock on Schedule D has changed significantly. In today’s blog, I take a look at the new procedures.

But First, New Form 8949

The biggest change to the process is that taxpayers now have to report every sale of stock on Form 8949, which was introduced for the first time this year. The instructions to the form will be included in the instructions to Schedule D, which were not available as of one minute ago, when I started writing this blog entry. Luckily, however, Andrew Schwartz of BNY Mellon Shareowners Services managed to snag a draft of the instructions from the IRS and generously provided it to me. I also had the benefit of listening to Andrew explain how Form 8949 is used when we presented on cost-basis reporting at the NASPP Conference (you can enjoy this benefit as well by purchasing the audio from our session).

Form 8949 will include information that used to be reported on Schedule D, including the description of the property that was sold (column a), the date acquired (column c), and the date sold (column d). It will also include information that will still be reported on Schedule D, including the sales price (column e on both forms), cost basis (column f), and any adjustments to the gain or loss (column g). Finally, it includes a code that explains the reason for the adjustment to the gain or loss (column b).

When reporting sales of stock, employees will report the cost basis as reported on Form 1099-B in column f. If this basis isn’t correct (see the Nov 18, 2010 blog entry “Pave the Way for Cost Basis Reporting Now“), then employees will report code B in column b and will report an adjustment in column g. If there is no basis reported on the Form 1099-B, then employees will report the correct basis in column f, but won’t report anything in column b (code) or column g (adjustments).

Multiple Forms 8949

Employees will fill out separate Forms 8949 for the following transactions:

• Sales for which a basis is reported on Form 1099-B
• Sales for which a basis is NOT reported on Form 1099-B
• Sales for which a 1099-B is not issued (e.g., if your broker relies on Rev. Proc. 2002-50 to not issue a Form 1099-B for same-day sales).

Form 8949 has two parts, one for short-term capital gains and one for long-term gains, so employees could have to include up to six of these forms with their tax return.

What About Schedule D?

Rather than reporting each individual sale on Schedule D, this form is now just an aggregate of the individual transactions reported on Form 8949. This is where employees will subtract their cost basis and any adjustments from their sale price to determine their actual gain, which is reported in column h.

Things Could Change

Note that today’s blog entry is based on a draft of the instructions.  I don’t expect any significant changes in the final instructions, but you just never know with the IRS. 

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara