Introduction

This chapter explains the tax treatment of sales and trades of investment property.

Investment property. This is property that produces investment income. Examples include stocks, bonds, and Treasury bills and notes. Property used in a trade or business is not investment property.

Form 1099-B. If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or an equivalent statement from the broker. You should receive the statement by January 31 of the next year. It will show the gross proceeds from the sale. The IRS will also get a copy of Form 1099-B from the broker.

Use Form 1099-B (or an equivalent statement received from your broker) to complete Schedule D of Form 1040. For more information, see Form 1099-B transactions under Reporting Capital Gains and Losses, later.

Other property transactions. Certain transfers of property are discussed in other IRS publications. These include:

• Sale of your main home, discussed in Publication 523, Selling Your Home,
• Installment sales, covered in Publication 537, Installment Sales,
• Various types of transactions involving business property, discussed in Publication 544, Sales and Other Dispositions of Assets,
• Transfers of property at death, covered in Publication 559, Survivors, Executors, and Administrators, and
• Disposition of an interest in a passive activity, discussed in Publication 925, Passive Activity and At-Risk Rules.

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