Instructions For Form 1099-B - 2018 (Page 10 of 11) in pdf

amount as a positive number. However, do not apply this

Box 2. Type of Gain or Loss

rule, and instead report adjusted basis as described

Determine whether the gain or loss is short-term or

earlier, for any stock considered to have been redeemed

long-term under section 1222, and whether any portion of

or sold, for example, fractional shares of stock resulting

the gain or loss is ordinary. In making the determination

from the merger that are only paid in cash.

you must do the following.

Example. Your customer Adrian buys 100 shares of

Consider any information reported on a transfer

covered stock in MNO Corporation for $5,000 in February

statement.

2018. MNO Corporation merges with PQR Corporation in

Consider any information reported on Form 8937.

December 2018. The merger is taxable only to the extent

Apply the rules for stock acquired from a decedent.

that boot is received. Adrian receives 100 shares of PQR

Apply the rules for stock acquired as a gift.

stock with a value of $4,700 and $800 cash boot in

If a customer acquired securities that caused a loss

exchange for his MNO stock. Adrian's resulting basis in

from a sale of other securities to be both nondeductible

the PQR stock is $4,700. Report the $800 cash boot in

under section 1091 and reported in box 5 of a 2013 or

box 1d, and report $300 in box 1e to reflect the net

earlier Form 1099-B (or reported on a 2014 or 2015 Form

reduction in basis from $5,000 (for the MNO stock) to

1099-B with code W in box 1f and an adjustment amount

$4,700 (for the PQR stock).

in box 1g), use the rules in section 1223(3) to determine

the holding period of the acquired securities.

Box 1f. Accrued Market Discount

In the case of a short sale, report whether any gain or

Enter the amount of accrued market discount in box 1f.

loss on the closing of the short sale is short-term or

long-term based on the acquisition date of the security

Box 1g. Wash Sale Loss Disallowed

delivered to close the short sale. Apply the rule in section

1233(d), if applicable.

Wash sales. Report wash sale loss amount disallowed.

You must report any loss disallowed under section 1091 if

Except as provided below, in addition to checking the

both the sale and purchase transactions occur in the

applicable short-term or long-term box, you are required

same account with respect to covered securities with the

to check the “Ordinary” check box if all or a portion of the

same CUSIP number. You are permitted, but are not

gain or loss may be ordinary. You may not report both

required, to report in box 1g all loss disallowed under

short-term and long-term gain or loss on the same Form

section 1091. For example, you may report a disallowed

1099-B.

loss even though a security is sold in one account and

repurchased in a different account. Increase the adjusted

For transactions that are denominated in a currency

basis of the acquired securities by the amount of the

other than the U.S. dollar, brokers must check the

disallowed loss reported in box 1g.

"Ordinary" check box because these transactions may be

You also do not have to apply the wash sale rules if:

section 988 transactions to the customer. Because a

The purchased security is transferred to another

customer may make an election to treat gains and losses

account before the wash sale,

on certain section 988 transactions as capital, the broker

The purchased security was purchased in another

must also check the short-term or long-term box to

account and later transferred into the account from which

indicate whether any portion of the gain or loss may be

securities were sold,

short-term or long-term. Brokers are not required to check

The securities are treated as held in separate accounts,

the “Ordinary” check box if the security is a market

discount bond or passive foreign investment company

The customer has notified you in writing (including in an

stock. Brokers are required to check the “Ordinary” check

electronic format) that he or she has made a valid and

box if the security is a contingent payment debt instrument

timely mark-to-market election under section 475 and

subject to the noncontingent bond method.

identifies the account from which the securities were sold

as containing only securities subject to the election.

You are not required to consider other transactions,

For more details, see Regulations section 1.6045-1(d)

elections, or events occurring outside the account when

(6)(iii).

determining whether the gain or loss on the sale is

short-term or long-term. You are also not required to apply

Example. Your customer Alex buys 100 shares for

holding period-related adjustments under section 1259

$1,000 in September 2018. In October 2018, he sells

(constructive sales), 475 (mark-to-market method of

them for $600. Within 30 days of the sale, he buys 75

accounting), 1092 (straddles), 1233(b)(2) (short sales),

1296 (mark-to-market method of accounting for

shares with the same CUSIP number in the same

marketable stock in a passive foreign investment

account. Since his loss is $400 ($1,000 minus $600) but

company), 852(b)(4)(A), 857(b)(8), 852(b)(4)(B)

the loss on 75 shares is disallowed, his disallowed loss is

(regulated investment company and real estate

$300. Report the $600 gross proceeds from the sale in

investment trust adjustments), and Regulations section

box 1d, $1,000 basis in box 1e, and $300 wash sale loss

1.1221-2(b) (hedging transactions).

disallowed in box 1g. The $300 in disallowed loss is

added to his basis in the newly purchased 75 shares.

Box 3. Check if Basis Reported to IRS

Check this box if:

You are not checking box 5, or

-10-

Instructions for Form 1099-B (2018)

Instructions For Form 1099-B - 2018 Page 10

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