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William Perez

New Form 8949 for Capital Gains

By February 12, 2012

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People with capital gains transactions to report will need to use Form 8949 along with Schedule D. Form 8949 is a brand new tax form, and debuts for the 2011 tax year. Individuals will detail the sale of capital assets, such as stocks, mutual funds and bonds, on Form 8949 before summarizing those details on the Schedule D.

Schedule D has likewise undergone a major redesign. The newly revised Schedule D functions as a summary of the total amounts reported on Form 8949.

The first thing I noticed about the new Form 8949 is it has more columns and a different structure than the old Schedule D. The Form 8949 has extra columns to indicate whether a transaction has any special characteristics, such as the sale of a home or a wash sale, which necessitate making adjustments to the amount of gain or loss being reported.

The second thing I noticed, capital gains transactions must be grouped into three categories, depending on whether the broker supplied cost basis information on the Form 1099-B (which reports the sale of a capital asset), whether the broker did not supply any cost basis information on the 1099-B, or whether no 1099-B was received for that transaction. These three categories are found along the top of the Form 8949. Taxpayers will need to fill out one Form 8949 for each category of capital gains transaction they have.

The newly revised Schedule D mirrors the structure of the Form 8949, with totals from each category found on Form 8949 showing up on the Schedule D.

The instructions have been revised too, and contain extensive discussion of the various codes and adjustments that may need to be indicated.

Resources from the IRS Web site:

April 8, 2012 at 8:27 pm
(1) RW says:

I got my 2011 1099-B showing income from tax free US Bonds from brokerage firm. It’s instructions tell me I need to report that TF income on the new form 8949 and 1040 schedule D. Normally, I don’t file because my SS plus any other income is below $25k. This year when computing if I need to file, it’s asking me to add in TF muni bond income which brought me over the $25k threshold.

Is Uncle Sam now collecting taxes on TF bond income even at the meager interest rates it earns which was promised to be free of income taxes?

April 9, 2012 at 1:34 am
(2) William Perez says:

RW, good question. There’s two separate issues going on here. One is that the sale or redemption of a bond is reported on the Schedule D (with the new form 8949 showing the supporting details). The second is that any tax-free interest is reported on Form 1040 line 8b and again on the worksheet that calculates the taxable portion of your Social Security benefits. The Schedule D (and Form 8949) measures the gain or loss on bond investment itself. If the bonds were redeemed at maturity and you purchased the bonds when they were first issued, the resulting gain or loss should be either zero or a small negative (loss) due to broker’s commissions. If you purchased the bonds after first issue or sold them prior to maturity, there’s more of a possibility you would have a non-zero result (either positive or negative). For the taxable portion of your Social Security benefits, we are measuring your total income, including all your tax-exempt interest and half of your Social Security benefits. Thus there’s the possibility that either the gain (if any) on the bond sale and/or the tax-free interest pushes some of your Social Security benefits into being taxable.

February 2, 2013 at 8:42 am
(3) Dee says:

I bought my condo May,2008 and sold it Dec. 2012 at a loss. Does this mean the 5 year period doesn’t take effect until May, 2013? We lived in it full time all 5 years. If that is the case, do I have to wait until next year to fill out and file the capital loss forms?

April 8, 2013 at 10:54 am
(4) leslie r says:

my bond which i bought for $20,000 about 6 years ago was called and i received $20,000. which forms must i file because of this? thank you.

January 7, 2014 at 11:06 pm
(5) Heather says:

I’m 17, I can claim head of household since I pay all the bills, how much money will I get back?

January 8, 2014 at 1:38 am
(6) William Perez says:

Heather, please refer to the article on head of household status and see if you meet the eligibility criteria.

February 23, 2014 at 2:32 pm
(7) KWW says:

I sold $10,000 worth of shares of a non-IRA mutual fund I first bought in 1994. Up to now, I have only reinvested so have been taxed on gains and dividends all these years. I received a 1099-B indicating Basis is Not Reported (section 5). Do I simply report the entire $10,000 on form 8949 and Sched D, with the entire amount counting as gains on 1040 line 13? Or is there an adjustment to this amount I should be considering? Do I try to figure out how much I bought the shares for and adjust this $10,000?

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