Reporting Capital Gains and Losses on Schedule D and Form 8949

The IRS has unveiled a new tax form for reporting capital gains and losses from stocks, bonds, mutual funds and similar investments. Starting with the 2011 tax year, investment transactions will be reported on the new Form 8949, Sales and Other Dispositions of Capital Assets.

Starting with 2011, Schedule D now functions as a summary of all capital gains transactions. Individual investment sales are to be detailed on the new Form 8949.

Any particular investment sales transaction will fall into one of three categories:

• Sales of covered securities for which cost basis is provided;
• Sales of non-covered securities for which no cost basis is provided on the 1099-B; or
• Sales of investments assets for which no 1099-B is received.

The new Form 8949 reflects this categorization. A separate Form 8949 is required for each type of transaction, with the appropriate check box indicated at the top of the form. Form 8949 is further divided into two pages, with short-term transactions being listed on page 1 and long-term transaction listed on page 2.