How to read a 1099-B
Last updated August 2026
Short answer
The 1099-B is the form that decides your investment tax bill, and it is the one people scan rather than read. Two boxes are worth real attention, and one of them is wrong often enough to justify checking every year.
What the form covers
One entry per sale, or per lot within a sale. It reports the description of what was sold, the date acquired, the date sold, gross proceeds, cost basis, any wash sale adjustment, and whether the transaction was short or long term.
Most brokers issue it as part of a consolidated 1099, alongside the 1099-DIV for dividends and the 1099-INT for interest.
The IRS receives an identical copy, so the figures on your return need to reconcile with it. Where you disagree, you adjust and explain rather than silently substituting your own number.
Proceeds, and why they are not your gain
Proceeds are the gross amount from the sale. Selling $50,000 of stock shows $50,000 of proceeds even if you paid $48,000 for it and made $2,000.
People occasionally panic at a large proceeds figure. It is not income. Your taxable gain is proceeds minus cost basis, and it can easily be a loss.
Check whether proceeds are reported gross or net of commissions, which the form indicates, so you do not deduct the same fee twice.
Cost basis is the box that goes wrong
For covered securities, generally those bought after the reporting rules took effect, the broker reports basis to the IRS and it is usually reliable.
For non-covered securities it may be blank. That includes older holdings, shares transferred from another broker, inherited shares and gifts. The obligation to establish the figure falls on you.
Three cases are wrong often enough to check every time: inherited shares, which usually get a stepped-up basis to the value at date of death rather than the original purchase price; transferred shares, where basis may not have followed; and RSU or ESPP shares, where the compensation element already taxed through your W-2 is frequently omitted, so filing unchanged means paying tax twice on the same money.
Short term and long term
The form marks each transaction as short or long term based on the holding period, and the distinction decides the rate. Long-term gains get preferential rates; short-term gains are taxed as ordinary income.
Transactions are also grouped by whether basis was reported to the IRS, which determines how they are entered on your return and whether you need to itemise each sale.
If the holding period looks wrong, it usually traces back to an incorrect acquisition date on a transferred lot.
Wash sale adjustments
If the broker identified a wash sale, the disallowed loss appears as an adjustment and is added to the basis of the replacement shares.
The limitation is that brokers only see their own accounts. A wash sale triggered across two brokers, or by a purchase inside your IRA, will not appear on either form, and identifying it is your responsibility.
That is the one place where the form can be complete and correct and still understate what you owe.
Try it in Walnut
Walnut reads your connected brokerage positions, so you can see what you hold and what you paid before the forms arrive rather than reconciling in April.
Corrected forms are normal
Amended 1099s in February and March are common, particularly if you hold REITs, international funds or anything that finalises its distribution classification late.
Filing the day the first form arrives is a reliable way to end up amending a return. If you hold funds that report late, waiting is usually cheaper than being early.
Compare a corrected form against the original rather than assuming only one number moved.
What to check before filing
That basis is present on every line, and that any blank or zero is one you can substantiate yourself.
That inherited holdings show a stepped-up basis rather than the original purchase price.
That RSU and ESPP sales include the compensation element in basis.
That the holding periods match your own records on anything transferred in.
Each of these takes seconds per line and each of them, left alone, costs money in the same direction.
Sources
Form 1099-B and its box-by-box instructions are published by the IRS as About Form 1099-B. Distribution classification, cost basis reporting and the 1099 series are covered in IRS Publication 550. Walnut is informational and is not an investment adviser. This guide is educational and not personalized tax or investment advice; anything with a tax consequence is worth confirming with a tax professional.
FAQ
What is a 1099-B?
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The form your broker issues reporting every sale in your account: what was sold, when it was acquired and sold, gross proceeds, cost basis, any wash sale adjustment, and whether the gain is short or long term. The IRS receives an identical copy.
Why is the cost basis on my 1099-B blank or zero?
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Because the security is non-covered, meaning the broker was not required to track it. That typically applies to older holdings, shares transferred from another broker, inherited shares and gifts. Establishing the correct figure from your own records is then your responsibility.
Do the proceeds on a 1099-B mean I owe tax on that amount?
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No. Proceeds are the gross sale amount, not your gain. Your taxable gain is proceeds minus cost basis, and it can be a loss. A large proceeds figure simply means you sold a lot, not that you made a lot.
Why did I receive a corrected 1099-B?
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Because a fund finalised its distribution classification after the original was issued, which is common with REITs and international funds and usually happens in February or March. Filing immediately when the first form arrives frequently leads to amending the return.