Question

Which of the following transactions is NOT reported on Form 8949 but is carried straight to Schedule D instead? Connor received a Form 1099-B reporting a wash sale of $371. Laquisha received a Form 1099-B with the basis not reported to the IRS for stock sale proceeds of $4,123. Malachi received a Form 1099-B reporting a short-term loss of $679 with the basis reported to the IRS. Zachary did not receive a Form 1099-B for the $248 he received when bartering with his friend, Wesley

Answer 1

The most appropriate option is C. i.e, Malachi received a Form 1099-B reporting a short-term loss of $679 with the basis reported to the IRS. It is so as per the relevant taxation laws; there are two exceptions to having to include transactions on Form 8949 that pertain to individuals and most small businesses:—

1. Taxpayers can attach a separate statement with the transaction details in a format that meets the requirements of Form 8949.

2. Taxpayers can omit transactions from Form 8949 if:

(i) They received a Form 1099-B that shows that the cost basis was reported to the IRS, and

(ii) The form does not show a non-deductible wash sale loss or adjustments to the basis, gain or loss, or to the type of gain or loss (short term or long term).

If one of the exceptions** applies, then the transactions can be summarized into short-term and long-term and reported directly on Schedule D without using Form 8949.

All the other options. i.e, A, B & D attracts Form 8949 alongwith Schedule D since it is assumed that proceeds from wash sales, stock sale proceeds and the barter process are reported to be gains and comply with the Form 8949 compulsory rules and regulation.

**Note: Even if an exception applies one can still voluntarily report it’s transactions on Form 8949 which might be easier if they have some transactions that meet the exception requirements and some that don't.