What Is a CUSIP Number on Form 1099-B?
A CUSIP number on Form 1099-B provides a precise identifier for a security, ensuring your reported capital gains and losses are calculated accurately.
One unfamiliar term on Form 1099-B is the CUSIP number, which is used for reporting financial transactions. Understanding this identifier helps ensure the accuracy of your tax return, as it directly relates to how investment sales are tracked and reported to the Internal Revenue Service (IRS).
Defining a CUSIP Number
A CUSIP number is a unique, nine-character alphanumeric code assigned to identify most financial instruments. The acronym stands for the Committee on Uniform Security Identification Procedures, which oversees the system. This identifier functions much like a Social Security Number for a person or a VIN for a car, providing a distinct label for a specific security. Every Treasury marketable security, for instance, has a CUSIP that identifies the security type and its maturity date.
These numbers are assigned to a broad range of securities, including stocks from U.S. and Canadian companies, U.S. government and municipal bonds, mutual funds, and exchange-traded funds (ETFs). The system’s purpose is to standardize security identification, which facilitates accurate and efficient clearing and settlement of trades. This ensures all parties reference the exact same instrument.
The CUSIP Number on Form 1099-B
The CUSIP number appears on Form 1099-B, “Proceeds from Broker and Barter Exchange Transactions,” a tax document reporting security sales. Brokers must issue this form to both the taxpayer and the IRS. The CUSIP number is listed in Box 1e, providing a specific identifier for the security sold during the tax year.
The CUSIP ensures precise tracking of financial transactions, which is important for calculating capital gains or losses. These amounts must be reported on Form 8949, “Sales and Other Dispositions of Capital Assets,” and then summarized on Schedule D (Form 1040). The unique code allows both the taxpayer and the IRS to verify that the proceeds correspond to the correct security.
Practical Implications for Tax Filing
For many taxpayers, the CUSIP number operates behind the scenes. If you use tax preparation software and import Form 1099-B data from your broker, the software uses the CUSIP to automatically match the sale with its purchase information. This process helps determine the cost basis and calculate the resulting capital gain or loss.
It is important to verify the accuracy of the information on your Form 1099-B. If you notice the CUSIP number is missing or incorrect, you should contact the broker who issued the form. They can review the transaction and issue a corrected Form 1099-B, which helps avoid mismatches with IRS records.
A CUSIP becomes particularly relevant following a corporate action, such as a merger, acquisition, or company spin-off. These events often result in the issuance of new CUSIP numbers for the securities involved. The Form 1099-B will report the CUSIP of the security as it existed at the time of the sale. This may be different from the CUSIP when you acquired it, which can complicate matching the sale to the correct cost basis records.