||Ask the Dollar Diva
How do I report the proceeds
from the sale of stock?
Dear Dollar Diva,
I sold some stock this year. When reporting the
information from a Form 1099-B on my tax return, should I report
the same gross proceeds that is stated on the form?
Yes. When you sell a stock, the
sales price you report on Schedule D, Capital Gains and Losses,
should be the same as the amount reported on your 1099-B. The IRS
matches the amounts the financial institutions report with the amounts
you report, and you can expect to get a notice if the amounts don't
What if the amount you received is less than
the amount reported on the 1099-B?
Financial institutions have two ways of reporting
the sales proceeds on Form 1099-B:
1. Gross proceeds:
If the amount reported on the 1099-B is more than you actually put
in your pocket, the financial institution reported the gross proceeds
before the commission to the IRS. If that happens, add the commission
to the price you paid for the stock when you report it on your Schedule
2. Net proceeds:
If the proceeds reported on the 1099-B are the same as the amount
you received, it means the financial institution is reporting the
net proceeds after commissions. Since the commission is already
deducted, you would not add it to the price you paid for the security.
What if the amount reported on the 1099-B
represents a return of your original investment, and no capital
gains or losses are involved?
You shouldn't get a 1099-B for a return of your
original investment, but it happens. When it does, the IRS expects
to find a matching entry on your tax return.
Report the amount stated on the 1099-B in two
places: first as the sales price, then as the cost. The net will
be zero, so there will be no tax consequence, and the IRS will be
happy because it was able to match the amount on the 1099-B to the
same amount reported on your tax return.
For more information on reporting 1099-B, see
Instructions for Schedule D, Capital Gains and Losses.
-- Posted: March 26, 2001