Instructions For Form 1099-B - 2018 (Page 2 of 11) in pdf

disallowed due to a wash sale (box 1g). When selling a

choose to report the information in those boxes and check

noncovered security and reporting it on a separate Form

box 5, you will not be subject to the penalties under

1099-B, you may check box 5 and leave boxes 1b, 1e, 1f,

sections 6721 and 6722 for failure to report that

1g, and 2 blank. If you check box 5, you may choose to

information correctly.

report the information requested in boxes 1b, 1e, 1f, 1g,

If a short sale obligation is satisfied by delivery of a

and 2 and will not be subject to penalties under section

security transferred into a customer's account

6721 or 6722 for failure to report this information correctly.

accompanied by a transfer statement indicating the

security was borrowed, see Regulations section

Example. Your customer Bella bought shares of stock

1.6045-1(c)(3)(xi)(C).

in ABC Corporation in April 1997, April 2017, and August

2017. The shares of stock bought in 2017 are covered

In the case of a short sale, you can take backup

securities. The shares of stock bought in April 1997 are

withholding either:

noncovered securities. In June 2018, Bella sells all of the

From the gross proceeds when the short sale is

stock in a single transaction. Even though the stock was

opened, or

sold in a single transaction, you must report the sale of the

From any gain when the short sale is closed if you

covered securities on two separate 2018 Forms 1099-B

expect to be able to determine the gain on the short sale

(one for the securities bought in April 2017 with long-term

at that time.

gain or loss and one for the securities bought in August

Backup withholding If backup withholding was taken

2017 with short-term gain or loss). You must report the

from the gross proceeds when a short sale was opened in

sale of the noncovered securities on a third Form 1099-B

2018 but the short sale was not closed by the end of 2018,

or on the Form 1099-B reporting the sale of the covered

file a 2018 Form 1099-B. Report the tax withheld in box 4.

securities bought in April 2017 (reporting long-term gain or

In box 1a, enter a brief description of the transaction (for

loss). You may check box 5 if reporting the noncovered

example, “$5,000 short sale of 100 shares of ABC stock

securities on a third Form 1099-B. If you check box 5, you

not closed”). Leave the other numbered boxes blank. File

may leave boxes 1b, 1e, and 2 blank or you may complete

a complete Form 1099-B for the year the short sale is

boxes 1b, 1e, and 2 and not be subject to penalties under

closed, as described above, but do not include the 2018

section 6721 or 6722 for failing to report this information

tax withheld on that Form 1099-B.

correctly.

Widely held fixed investment trusts (WHFITs).

Short sales of securities. Do not report a short sale

Trustees and middlemen must report the amount of

entered into after 2010 until the year a customer delivers a

non-pro rata partial principal payments (as defined in

security to satisfy the short sale obligation. Disregard

Regulations section 1.671-5(b)(13)), trust sales proceeds

sections 1259 (constructive sales) and 1233(h) (short

(as defined in Regulations section 1.671-5(b)(21)),

sales of property that becomes worthless). Report the

redemption asset proceeds (as defined in Regulations

short sale on a single Form 1099-B unless:

section 1.671-5(b)(14)), redemption proceeds (as defined

You are reporting both short-term and long-term gain or

in Regulations section 1.671-5(b)(15)), the sales asset

loss from a short sale closed by delivery of covered

proceeds (as defined in Regulations section 1.671-5(b)

securities (as just explained under

How many forms to file

(17)), and the sales proceeds (as defined in Regulations

for each

transaction),

section 1.671-5(b)(18)) that are attributable to a trust

The securities delivered to close the short sale include

interest holder (TIH) for the calendar year on Form

both covered securities and noncovered securities (as

1099-B.

explained under

How many forms to file for each

To determine the amount of each item of proceeds to

transaction), or

be reported on Form 1099-B, see, generally, Regulations

There was backup withholding and other conditions

section 1.671-5. If the trustee provides WHFIT information

apply (see

Backup

withholding, later).

using the safe harbor rules in Regulations section

Report on Form 1099-B the relevant information about the

1.671-5(f)(1) or (g)(1), the trustee or middleman must

security sold to open the short sale, with the exceptions

determine the amounts reported on Forms 1099 under

described in the following paragraphs.

Regulations section 1.671-5(f)(2) or (g)(2), as appropriate.

In box 1a, report the quantity of the security delivered to

Check box 5 and leave boxes 1b, 1e, and 2 blank if:

close the short sale.

You are a broker reporting the sale of a security held by

In box 1b, report the acquisition date of the security

a WHFIT to the WHFIT trustee; or

delivered to close the short sale.

You are a trustee or middleman of a WHFIT reporting

In box 1c, report the date the security was delivered to

non-pro rata partial principal payments, trust sale

close the short sale.

proceeds, redemption asset proceeds, redemption

proceeds, sales asset proceeds, and sales proceeds to a

In box 1e, report the adjusted basis of the security

TIH.

delivered to close the short sale.

Requirement to furnish a tax information statement

In box 2, report whether any gain or loss on the closing

to TIH. A tax information statement that includes the

of the short sale is short-term or long-term based on the

information provided to the IRS on Form 1099-B, as well

acquisition date of the security delivered to close the short

as additional information identified in Regulations section

sale. Apply section 1233(d), if applicable.

1.671-5(e), must be provided to TIHs. The written tax

If the short sale is closed by delivery of a noncovered

information statement furnished to the TIH for 2018 is due

security, you may check box 5. In this case, you do not

on or before March 15, 2019. The amount of an item of a

have to complete boxes 1b, 1e, and 2. However, if you

trust expense that is attributable to a TIH must be included

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Instructions for Form 1099-B (2018)

Instructions For Form 1099-B - 2018 Page 2

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