Tax6 min read

Form 1099-B Brokerage Statement Explained

Form 1099-B reports the proceeds from sales of securities like stocks, bonds, and mutual funds through your brokerage account. It also may include cost basis information, which you need to calculate capital gains or losses. Understanding this form is essential for accurate tax reporting of investment activity.

This guide is general educational information, not professional advice. If the document involves a serious deadline, lawsuit, tax issue, health decision, or major financial consequence, get qualified help.

What this document usually means

Your brokerage firm sends a 1099-B when you sold investments during the year. The form reports the sale date, proceeds, and in many cases the cost basis for each transaction. The IRS receives a copy, so the amounts must match what you report on your return.

The difference between proceeds and cost basis is your capital gain or loss. Short-term gains on assets held for one year or less are taxed at ordinary income rates, while long-term gains on assets held longer receive preferential tax rates.

The first things to check

Verify each transaction against your brokerage statements. Check the sale proceeds, dates, and cost basis. If cost basis is not reported or is listed as unknown, you will need to determine it yourself using purchase records.

Pay attention to whether each transaction is categorized as short-term or long-term. This classification determines the tax rate. Also check for wash sale adjustments, which occur when you sold a security at a loss and repurchased a substantially identical security within 30 days.

If you have multiple brokerage accounts, you will receive a separate 1099-B from each.

Common reasons this letter feels confusing

The 1099-B can be overwhelming if you had many transactions during the year. Consolidated statements from brokerages can run dozens of pages with each trade listed individually.

Cost basis confusion is common, especially for inherited securities, gifts, stock splits, or shares purchased at different times. If the broker reports cost basis incorrectly, you must adjust it on your return using Form 8949.

What to do before you pay or respond

No response is needed for this form. Use it to prepare Schedule D and Form 8949 on your tax return. Most tax software can import 1099-B data directly from your brokerage.

If cost basis is missing or incorrect, gather your purchase records to calculate it. For inherited securities, the cost basis is typically the fair market value at the date of death.

If you have capital losses that exceed your gains, you can deduct a limited amount against ordinary income and carry the rest forward to future years.

How Letter Lens can help

Upload your 1099-B to Letter Lens, and it will summarize your total proceeds, gains, and losses in plain language. It will identify transactions where cost basis is missing and explain what the form's categories mean.

Letter Lens helps you make sense of complex brokerage statements so you can prepare your return accurately or have an informed conversation with your tax preparer.

Key Terms Decoded

ProceedsThe total amount received from selling a security.

Cost basisThe original purchase price of a security, used to calculate gain or loss.

Capital gainThe profit from selling a security for more than its cost basis.

Capital lossThe loss from selling a security for less than its cost basis.

Wash saleA sale at a loss where you repurchased the same security within 30 days, disallowing the loss.

Schedule DThe tax form used to report capital gains and losses from investment transactions.

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