Desktop: Form 8949 - Sales and Dispositions of Capital Assets

How Can I Enter Information on Form 8949 on the Desktop?  

The following information is reported on Form 8949:

• A capital asset's sale or exchange that has not been reported anywhere else in the tax return.
• Benefit from an unintended conversion of a nonbusiness capital asset. Provided it does not result from casualty or theft. 
• Bad debt from a nonbusiness
• Worthlessness of a security
• The Choice to Forfeit capital benefit that is invested in a Qualified Opportunity Fund (QOF). 
• Disposition of interest acquired in a QOF.

Information entered in the Form 8949 menu in Taxx Savage ProWeb must be the very information that is displayed on the form or the sales price statement. Separate menu lines are provided for making adjustments if there is need for them. It is to Schedule D that the summary of the reported transactions on Form 8949 flow. 

A 1099-B report of a futures contract that is regulated, a contract of a foreign currency, or a contract resulting from a section 1256 option only is to bear information in Boxes 1a, 8-11, and possibly 4. This information is to be directly entered on Form 6781, Gains and Losses From Section 1256 Contracts and Straddles. For more information on Form 6781, click here. 

To complete Form 8949 as well as Schedule D: 

• Go to the Main Menu of the Tax Return (Form 1040) 
• Proceed to the Income Section 
• Select Capital Gains/Loss (Sch D) 
• Select New then key in the asset’s information: 
• Description of Property - apply the same description provided on Form 1099-B 
  • For stock, Show the ticker symbol as well as the number of shares. For instance, 100 SHARES ABC 
  • For virtual currency, provide the name and amount. 
  • Enter RFC for a regulated futures contract 
  • Enter SECTION 1256 OPTION if it is a Section 1256 option. 
  • For a QOF, only enter the EIN of the QOF
• Form 1099-B Type - Three options are available: 
  • Box 12 Cost Basis Reported to the IRS - Select in the event that the Box 12 check box (post 2018) or Box 3 (2018 and prior) is checked. 
  • Box 12 Cost Basis NOT Reported to the IRS - Select in the event that the Box 12 check box (post 2018) or Box 3 (2018 and prior) is not checked. 
  • Form 1099-B Not Received - This is selected when the transaction was not reported on Form 1099-B. For instance, it is reported on Form 1099-S or it was never reported on any form. 
• Date Acquired - Enter the Date in Box 1b whenever reported on Form 1099-B. If the securities were either not recovered (that is, Box 5 is checked) or they were bought on different dates, then the date may miss. The taxpayer must, in these situations, provide more information. Select the Alternate Option check box if need be and select one of the following options: 
  • Various - Short-Term - Securities bought on different dates but all within a year of the date of sale. 
  • Various - Long-Term - Securities bought on different dates but all exceeding a year before the date of sale. 
  • Inherited Short-Term - This would be very unusual. An example could be inherited property from a person who had also inherited the property and both descendants passed on in the same year. 
  • Inherited - Long-Term - almost all the inherited assets would apply this for date acquired
• Date Sold - use the date displayed in Box 1c if reported on Form 1099-B 

The “Check here if a short sale” box is to be marked when Form 1099-B shows the proceeds of a short sale before 2011. 

Select the Alternate Option if the need arises and pick one of the options below: 

• Bankrupt - Short-Term 

Bankrupt - Long-Term - For instance, Bad debt of a nonbusiness because of bankruptcy 

• Worthless - Short-Term 

Worthless - Long-Term - A security without value is worthless. However, its security abandoned by the taxpayer may also be included. 

• Deferred QOF - Short-Term  

Deferred - Long-Term  - if the taxpayer has an investment on a capital gain in a QOF, use one of these. 

• Various - Short-Term (Not Electronic) 
• Various - Long-Term (Not Electronic) - VARIOUS is not allowed as a sale date by the IRS. A return that has Various as the Date Sold will not be e-filed. So as to e-file a return, ensure that you enter a date. Summarize an aggregate of long or short-term sales if you have to. 

• Sales Price - Either enter the Sales Price or select one of the options from the dropdown menu if applicable: 

Expired - This is selected when a capital asset is the expired option. (Expired Section 1256 contract options are reported on Form 6781 and not here.) 

Worthless - This is used when the nonbusiness debt is uncollectible. (Business bad debts are  entered as expenses of the business, not here.) 

• Is the transaction a Short Term Section 1061 Partnership Interest? - To recharacterize the capital gain received from a transaction on section 1061 from being long-term to being short-term due to the inability to meet the 3-year holding rule, check this box. For more information, check out the IRS Publication 541 here.
• Cost - Enter the cost basis. 

The basis of the property that is gotten by gift is normally the basis of the donor. 

The basis of a property that has been inherited is usually the fair market value at the date of death. 

Select EXPIRED from the dropdown menu if it is applicable, for instance, an expired written option.  

After you have entered the transaction’s initial information,  you will land on the Capital Gains & Loses Information Menu where the following options are available: 

• You can double-check your work 
• Display any adjustments 
• For an MFJ, indicate if the transaction is the taxpayer’s, their spouse or it is jointly owned. 

An adjustment may either be shown on Form 1099-B, for instance, such as a wash sale, or it may be required in other scenarios such as when a capital gain is being postponed or excluded or when a capital loss is disallowed. For explanation of all the adjustment codes, click here to see the IRS instructions for Form 8949. 

• In the event that an adjustment is required, choose Adjustment Code then select the applicable code. For instance, for a transaction with the adjustment code “W” for wash sale, select W and select OK when done. 
• Select Adjustment to Gain/Loss then enter the adjustment’s amount. When adjusting a gain, the adjustment has to be a positive number and when adjusting a loss, the adjustment has to be a negative number. This is because the entered amount is to be subtracted from the net gain or loss. In the example of the wash sale, the amount entered has to be similar to the amount of the gain or loss so as to result in a net gain/loss that is zero.

Caveats: 

• There may be many Form 8949 in the tax return since each “Form 1099-B type” is to be reported on its own. 
• Investments that are QOF should all be listed separately by investment. There is only one exception to this; eligible capital gains investments that are of the same character, date and QOF can be grouped together in a single entry. 

 

Additional Information:

IRS: Instructions for Form 8949, Sales and Other Dispositions of Capital Assets