An Internal Revenue Service form implemented in tax year 2011 for individual taxpayers to report capital gains and losses from investment activity. Taxpayers must use form 8949, Sales and Other Dispositions of Capital Assets, to report short- and long-term capital gains and losses from sales or investment exchanges. In previous years, taxpayers used schedule D to report such transactions. Starting in 2012, partnerships and corporations were also required to use form 8949.
The transactions that taxpayers must report on form 8949 are reported by financial institutions to the IRS and to taxpayers using form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Taxpayers must use a separate form 8949 to report each category of financial transaction. They also must use form 8949 to correct any inaccuracies in the data reported on form 1099-B.
The types of transactions that must be reported on form 8949 include distributed capital gains, undistributed capital gains, sale of a main home, sale of capital assets held for personal use, sale of a partnership interest, capital losses, nondeductible losses, losses from wash sales, short sales, gains or losses from options trading, and disposition of inherited assets. This form is also used to report gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit, nonbusiness bad debts, and undistributed long-term capital gains from form 2439. Large partnerships and corporations may choose to also use form 8949 to report their share of gain or loss from a partnership, S corporation, estate or trust. The new requirements under form 8949 can be burdensome for active traders, especially those who trade the same investments in accounts with more than one brokerage company.