Form 8949 Example Filled Out: A Step-by-Step Breakdown

Filing taxes can be complicated, especially when reporting investment gains and losses. Form 8949 is required for individuals who have sold stocks, bonds, or other capital assets. It helps the IRS track these transactions and ensures accurate tax calculations.

This guide walks through a filled-out example of Form 8949, breaking it down step by step to clarify how to report short-term and long-term sales, apply adjustments, and complete the form correctly.

Columns and Boxes

Form 8949 captures detailed information about each investment sale. Each row represents a separate transaction, with multiple columns used to break down the specifics.

Column (a) requires a description of the asset sold, typically the stock ticker symbol or a brief identifier. This helps the IRS match reported transactions with brokerage records.

Column (b) records the acquisition date, which determines whether the sale is short-term or long-term. This date should match brokerage statements to avoid discrepancies. Column (c) lists the date of sale, which is equally important for classification.

Column (d) reports the proceeds from the sale, reflecting the gross amount received before fees or commissions. This figure is typically found on Form 1099-B. Column (e) records the cost basis, or the original purchase price, including any adjustments for stock splits or reinvested dividends. If the cost basis is incorrect or missing, taxpayers must determine and report it accurately.

Column (f) indicates whether the transaction was reported to the IRS with basis information. If the broker has already reported the cost basis, the appropriate box is checked. If not, taxpayers must provide their own calculations. Column (g) is where adjustments are made, such as wash sale disallowances, using specific codes listed in the form’s instructions.

Short-Term Section

Short-term transactions involve assets held for one year or less before being sold. These sales are taxed at ordinary income tax rates, ranging from 10% to 37% in 2024, depending on total taxable income. Since these rates are higher than long-term capital gains rates, accurate reporting is important to avoid unnecessary tax liabilities.

Each short-term transaction is categorized based on how the broker reported it. If the cost basis was included on Form 1099-B, it falls under Part I, Box A. If the broker reported the sale but not the cost basis, it belongs in Box B. Transactions not reported by a broker, such as private sales, are recorded in Box C. Proper classification ensures the IRS can match reported figures with brokerage records.

If multiple sales occurred, each transaction must be listed separately unless eligible for summary reporting. Brokerage statements should be cross-checked to confirm proceeds, cost basis, and holding periods. Any discrepancies, such as missing cost basis information, require manual corrections.

Long-Term Section

Long-term capital gains apply to assets held for more than one year before being sold, offering lower tax rates. In 2024, these rates are 0%, 15%, or 20%, depending on taxable income. Single filers with income up to $47,025 pay no tax on long-term gains, while those earning between $47,026 and $518,900 face a 15% rate. Income above this threshold is taxed at 20%.

Additional taxes may apply depending on income. The Net Investment Income Tax (NIIT), an extra 3.8% levy, affects individuals with modified adjusted gross income exceeding $200,000 ($250,000 for married couples filing jointly).

Certain asset types receive special tax treatment. Collectibles, including rare coins, art, and precious metals, are taxed at a maximum rate of 28%. Real estate transactions may involve depreciation recapture, taxed at a maximum rate of 25% on the portion of gains attributed to prior depreciation deductions.

Calculating Adjustments

Adjustments on Form 8949 account for discrepancies between reported figures and taxable amounts. One common adjustment involves wash sales, which occur when a security is sold at a loss and repurchased within 30 days before or after the sale. Under IRS rules, these losses are disallowed and must be added back to the cost basis. If a wash sale adjustment applies, taxpayers must enter code “W” in column (g) and adjust the basis accordingly.

Corporate actions, such as mergers, spin-offs, and stock splits, often require basis adjustments. For example, in a 2-for-1 stock split, the number of shares doubles while the cost basis per share is halved. If an investor originally purchased 100 shares at $50 each, they now own 200 shares with a basis of $25 each.

Return of capital distributions, common in real estate investment trusts (REITs) and master limited partnerships (MLPs), also affect cost basis. These non-dividend payments reduce the cost basis of an investment, increasing taxable gains upon sale. If not accounted for, investors may understate their gains, leading to penalties.

Example of a Completed Form

A completed Form 8949 illustrates how sales, adjustments, and classifications determine taxable gains or losses.

Short-Term Transactions

Suppose an investor sold 50 shares of XYZ Corp. on March 15, 2023, for $5,000 after purchasing them on June 10, 2022, for $4,200. Since the holding period was less than a year, this sale is classified as short-term and reported in Part I. The proceeds of $5,000 are entered in column (d), while the cost basis of $4,200 is recorded in column (e). Because the broker reported both the sale and cost basis, this transaction is placed under Box A. The resulting gain of $800 is included in total short-term capital gains subject to ordinary income tax rates.

If the investor also sold 100 shares of ABC Inc. on December 5, 2023, for $3,500 after acquiring them on February 1, 2023, for $4,000, this results in a short-term capital loss of $500. This transaction is recorded in the same section, reducing overall taxable short-term gains. If total losses exceed gains, up to $3,000 can be offset against ordinary income, with remaining losses carried forward.

Long-Term Transactions

Now consider a long-term sale where the same investor sold 75 shares of DEF Corp. on September 20, 2023, for $9,000 after purchasing them on July 15, 2019, for $6,500. Since the holding period exceeded one year, this transaction is recorded in Part II. The proceeds of $9,000 are listed in column (d), and the original purchase price of $6,500 is recorded in column (e). The resulting long-term capital gain of $2,500 benefits from lower tax rates based on income bracket.

If the investor also sold 30 shares of GHI Ltd. for $2,200 after buying them for $2,800 in 2018, this results in a long-term capital loss of $600. This loss offsets long-term gains first before applying to short-term gains. If total losses exceed total gains across both sections, the excess can be carried forward to reduce taxable income in future years.