Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Reporting Capital Gain or Loss

Reporting a Capital Gain or Loss

To report a capital gain or loss, you will need to identify:

  • Basis or Adjusted Basis:
    • Basis is the original cost of the asset
    • Adjusted basis includes original cost plus any increases or decreases to that cost (such as commissions, fees, depreciation, deductible casualty losses, insurance reimbursements, major improvements)
    • Brokers must report cost or other basis on Form 1099-B, unless the securities sold were noncovered securities
    • Taxpayers must use codes to report if 1099-B was received, and whether or not it showed basis reported to the IRS
  • Holding period:
    • Short-term property is held one year or less
    • Long-term property is held more than one year (long-term capital gains are taxed at a lower rate than short-term gains)
    • Brokers must report whether the gain or loss is short-term or long-term on Form 1099-B, unless the securities sold were noncovered securities
  • Proceeds from the sale:
    • Form 1099-B reflects gross or net proceeds for sales of stocks or shares in mutual funds
    • Form 1099-S usually reflects gross proceeds of real estate transactions
    • Other evidence in the absence of above