Form 8949 & 1099-B Issues

Broker reporting is not taxpayer compliance

Many traders and tax preparers assume that the wash-sale loss reported in Form 1099-B, box 1g, is the taxpayer’s final answer. It is not. Broker reporting follows narrower rules than taxpayers must apply under IRC Section 1091.

A broker reports wash sales for covered securities when the sale and replacement purchase occur in the same account and involve securities with the same CUSIP. Broker Form 1099-B reporting does not capture wash sales:

Across different brokerage accounts
Between a taxpayer’s account and a spouse’s account
Between a taxable account and an IRA or Roth IRA
Between stock and options on that stock
Across different option contracts

Taxpayers must calculate wash sales across all relevant accounts and substantially identical positions. Downloading Form 1099-B into consumer or professional tax software does not perform this broader taxpayer-level calculation.

Box 1g does not measure the year-end deferral

A large annual wash-sale adjustment in box 1g does not necessarily mean the same amount remains deferred into the next year. Many wash-sale losses generated during the year may already have been absorbed when replacement positions were sold without triggering another wash sale.

Conversely, an unreported cross-account wash sale may remain deferred in an open replacement lot at year-end.

A taxable-account loss matched to an IRA purchase can become permanently nondeductible. It’s permanently forfeited (not carried forward)—it’s not deferred, unlike a normal wash sale.

The critical calculation is the wash-sale loss embedded in open replacement positions after year-end—not the gross annual total reported in box 1g.

Taxpayer-level trade accounting

We recommend TradeLog for securities trade accounting and taxpayer-level wash-sale calculations. TradeLog can consolidate brokerage data, match tax lots across multiple accounts, calculate basis adjustments, track deferred losses between tax years, and produce Form 8949-formatted reports.

The tax return should also reconcile proceeds and basis for each Form 1099-B and preserve an audit trail that explains taxpayer-level corrections.

Form 8949 reporting methods

Individuals report securities transactions on Form 8949 unless an IRS exception applies.

Transactions can bypass Form 8949 and be aggregated directly on Schedule D only when the basis was reported to the IRS, Form 1099-B shows no adjustment in box 1f or 1g, and the taxpayer has no other corrections or adjustments.

For high-volume trading, an individual can report totals on Form 8949 using code M and attach a transaction-level statement containing the same information as Form 8949. An individual cannot use “Available upon request” in place of the required transaction details.

Partnerships filing Form 1065 and S corporations filing Form 1120-S receive a special summary-reporting provision when they have more than five transactions in the applicable part of Form 8949. Qualifying entities may report combined totals using code M and “Available upon request” without attaching every transaction. This privilege comes from the Form 8949 entity rule—not from trader tax status.

Section 475 uses Form 4797

Business trading gains and losses covered by a valid Section 475 election are reported on Form 4797, Part II, line 10—not Form 8949. Although totals appear on Form 4797, its instructions require an attached statement that details each transaction and separately identifies positions marked to market at year-end.

Properly segregated investment positions remain capital transactions that are reported on Form 8949 and Schedule D.

Learn more

For comprehensive coverage, see Chapter 4, “Accounting for Trading Gains and Losses,” in Green’s 2026 Trader Tax Guide.