This guide will also cover how Form 8949 works with Schedule D, including the difference between short-term and long-term gains, cost-basis corrections, stock sales, and digital asset transactions. For 2025 returns, the IRS instructions include separate reporting categories for short-term and long-term digital asset transactions.

From AIM Financial — Tax Preparation Services in Grand Rapids, Kentwood, Wyoming, and West Michigan

Did you sell stocks, cryptocurrency, mutual funds, investment property, or other assets during the year? If so, you may need to report the transaction on your federal income tax return. Understanding how capital gains and losses work is important because the sale price alone does not determine how much tax you owe.

IRS Form 8949, Sales and Other Dispositions of Capital Assets, helps taxpayers report asset sales, calculate gains and losses, and make adjustments when necessary. The totals generally flow to Schedule D, which summarizes capital gains and losses for the tax return. <Cite refs={[“turn862272search0″,”turn862272search1”]}/>

AIM Financial helps individuals and businesses in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan prepare accurate tax returns and understand investment-related tax reporting.

What Is IRS Form 8949?

Form 8949 is used to report sales, exchanges, and certain other dispositions of capital assets. A capital asset may include stocks, bonds, mutual funds, cryptocurrency, and many other types of property held for investment or personal use.

The form helps reconcile the information reported on documents such as Form 1099-B, Form 1099-DA, and Form 1099-S with the amounts reported on your tax return. It also provides a place to report adjustments to proceeds, cost basis, or gain and loss calculations when required. <Cite refs={[“turn862272search0″,”turn862272search1”]}/>

Examples of transactions that may require Form 8949 include:

• Selling shares of stock or exchange-traded funds.
• Selling mutual fund investments.
• Selling or exchanging cryptocurrency.
• Selling certain real estate or other capital assets.
• Reporting transactions for which a broker did not report the cost basis to the IRS.
• Correcting cost basis or making certain tax adjustments.

Not every transaction must be listed individually on Form 8949. Certain transactions with basis reported to the IRS and no adjustments may be reported directly on Schedule D if the IRS requirements are met.

What Is a Capital Gain or Capital Loss?

A capital gain generally occurs when you sell an asset for more than its adjusted tax basis. A capital loss generally occurs when you sell it for less than its adjusted basis.

For example, suppose you purchase shares of stock for $3,000 and later sell them for $4,200. Assuming no transaction costs or other adjustments, you have a capital gain of $1,200.

If you purchased an investment for $3,000 and sold it for $2,200, you would have a capital loss of $800, assuming no other adjustments.

Your cost basis is generally what you paid for the asset, adjusted for applicable items such as certain fees, reinvested distributions, stock splits, or other basis adjustments.

Accurate cost-basis information is important. If a broker reports an incorrect basis or does not report one, you may need to use your records to determine the correct amount.

Short-Term vs. Long-Term Capital Gains

The amount of tax you pay may depend on how long you owned the asset before selling it.

Short-term capital gains and losses generally involve assets held for one year or less. Net short-term gains are generally taxed at ordinary income tax rates.

Long-term capital gains and losses generally involve assets held for more than one year. Qualifying net long-term gains may receive preferential federal tax rates, depending on your taxable income and the type of gain.

The holding period generally begins the day after you acquire the asset and includes the day you dispose of it. Inherited property generally receives long-term treatment regardless of how long the beneficiary held it. Special rules may apply to certain assets and transactions. <Cite refs={[“turn862272search1″,”turn862272search2”]}/>

This distinction matters when preparing Form 8949 because short-term transactions are reported in Part I, while long-term transactions are reported in Part II.

How Do You Complete Form 8949?

Form 8949 asks for information about each reportable transaction, including:

• Description of property: For example, the name of the stock, fund, or digital asset.
• Date acquired: When you purchased or otherwise acquired the asset.
• Date sold or disposed of: When the transaction occurred.
• Proceeds: The amount received from the sale, generally before any adjustments required by the form.
• Cost or other basis: The asset’s tax basis.
• Adjustment code and amount: Used when a correction or special tax adjustment applies.
• Gain or loss: The result after accounting for proceeds, basis, and applicable adjustments.

Part I is generally used for short-term transactions, and Part II is generally used for long-term transactions. The boxes at the top of each part identify the type of transaction being reported, including whether the basis was reported to the IRS.

The instructions for Form 8949 explain how to select the appropriate box and when an adjustment code is required. <Cite refs={[“turn862272search1”]}/>

What Is Schedule D?

Schedule D, Capital Gains and Losses, generally summarizes the results from Form 8949 and certain other transactions.

Think of Form 8949 as the place where many individual transactions and adjustments are reported, while Schedule D brings together the totals needed to calculate your overall capital gain or loss.

Schedule D may also be needed for transactions reported on other tax forms. The final result generally flows to the appropriate line of your federal income tax return. Some taxpayers with only certain straightforward transactions may be eligible to report them directly on Schedule D without completing Form 8949 for those transactions. <Cite refs={[“turn862272search0″,”turn862272search1”]}/>

What About Cryptocurrency and Digital Assets?

Digital asset transactions can create capital gains or losses. Selling cryptocurrency, exchanging one digital asset for another, or using digital assets to purchase goods or services may have federal tax consequences.

For 2025 returns, the IRS instructions for Form 8949 include separate reporting categories for short-term and long-term digital asset transactions. Form 1099-DA may provide information about certain digital asset transactions, although the information reported on the form may not establish your complete tax basis or gain or loss. <Cite refs={[“turn862272search1”]}/>

Keep records showing:

• The date each digital asset was acquired.
• The amount paid or other basis.
• The date and value when it was sold, exchanged, or used.
• Transaction fees and relevant exchange records.
• Records of transfers between wallets or accounts.

A transfer between wallets you own is not necessarily a taxable sale, but complete records can help establish what happened and calculate any taxable transaction correctly.

Can Capital Losses Reduce Your Taxes?

Capital losses may offset capital gains. If your total capital losses exceed your capital gains, you may be able to deduct some of the net loss against other income.

For individuals, the annual deduction against other income is generally limited to $3,000, or $1,500 if married filing separately. Unused capital losses may generally be carried forward to future years, subject to applicable rules. <Cite refs={[“turn862272search2”]}/>

Special restrictions can apply. For example, the wash-sale rules may disallow a loss when you sell stock or securities at a loss and acquire substantially identical stock or securities within the applicable period. Digital assets may involve different considerations, so transactions should be reviewed under the rules applicable to the asset and tax year.

Records to Gather Before Filing

To prepare Form 8949 accurately, gather your brokerage statements, Forms 1099-B and 1099-DA, purchase confirmations, sale records, digital asset transaction histories, and any prior-year capital loss carryover information.

If you sold inherited property, received stock as a gift, or sold an asset with a basis that differs from its original purchase price, additional documentation may be needed.

Do not assume the amount on a brokerage statement is always the final taxable gain or loss. Review the reported basis and transaction details, and keep records supporting any necessary corrections.

How AIM Financial Can Help With Capital Gains Tax Preparation

Capital gains reporting can become complicated when you have multiple brokerage accounts, cryptocurrency transactions, inherited investments, or assets with missing or incorrect cost-basis information.

AIM Financial helps taxpayers in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan with tax preparation and investment-related reporting. If you sold investments or digital assets, contact AIM Financial to discuss your tax documents and the information needed to report your transactions correctly.

Organizing your records before filing can help reduce errors and ensure that eligible capital losses and other applicable adjustments are considered.

Final Thoughts

IRS Form 8949 is an important tool for reporting capital asset sales and reconciling transaction information. By understanding cost basis, holding periods, capital gains, and capital losses, taxpayers can be better prepared for tax season.

For help preparing your federal income tax return and reporting investment transactions, contact AIM Financial, serving Grand Rapids, Kentwood, Wyoming, and West Michigan.