The IRS has unveiled a new tax form for reporting capital gains and losses from stocks, bonds, mutual funds and similar investments. Starting with the tax year, investment transactions will be reported on the new Form , Sales and Other Dispositions of Capital Assets. A pdf version of Form is posted at the IRS Web site; instructions for this new form is included with the instructions for Schedule D.

The IRS has also revised Schedule D and Form B.

Back in , Congress passed the Emergency Economic Stabilization Act , which required that brokers begin reporting the cost basis of investment products to investors and to the IRS. In theory, having brokers report cost basis along with sales proceeds on the Form B will greatly reduce the burden on individual taxpayers to maintain extensive records on their investments and could simply the tax reporting process.

Form , Sales and Other Dispositions of Capital Assets

Brokerage firms send out a Form B to report the sale of an investment product, such as a stock or mutual fund. Previously, the B reported information about the sale of the investment such as the date of sale and the sale proceeds.

Taxpayers then needed to supply the purchase date and purchase price when reporting the transaction on their Schedule D.

Starting in , cost basis information will be included directly on the B if the broker is required to supply that information. Whether a broker is required to provide cost basis information depends on whether the investment is a " covered security.

The IRS has substantially revised Form B to facilitate this cost basis reporting. The IRS has also substantially revised Schedule D and created a new Form Starting with , Schedule D now functions as a summary of all capital gains transactions.

Individual investment sales are to be detailed on the new Form The new Form reflects this categorization. A separate Form is required for each type of transaction, with the appropriate check box indicated at the top of the form. Form is further divided into two pages, with short-term transactions being listed on page 1 and long-term transaction listed on page 2. To phrase this a different way, there will be one Form reporting capital gains and losses where cost basis is provided check box A , with short-term transactions listed on page 1 and long-term transactions listed on page 2.

There will be a separate Form reporting capital gains and losses with cost basis in not provided check box B , with short-term transactions shown on page 1 and long-term transactions shown on page 2. And there will be a third Form reporting capital gains and losses where Form B was not received check box C. Thus it is possible for a taxpayer to have one, two or three Forms one for each check box.

Totals from these separate Forms will be summarized on the newly revised Schedule D. The structure of the new Schedule D mirrors the structure of Form Taxpayers will also notice that Form has two columns that are not present on the previous version of Schedule D. New Form has a column B to report a "Code" and has column G to report "Adjustments to gain or loss. Taxpayers will be able to correct the cost basis of a particular transaction by reporting the basis as reported by the broker in column F and then making any adjustments or corrections in column G.

The Purpose of IRS Form | Investopedia

Cost basis reporting by brokers will never fully and completely eliminate the need for taxpayers to maintain their own records. That's because basis reporting will be phased-in and applies only to newly acquired shares. Stock purchased prior to , mutual fund shares purchased prior to , and bonds purchased before won't have basis reported on the B.

That information will likely be found in other reports or data, such as brokerage statements, year-end reports or trade confirmations. Search the site GO.

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