AIM Financial | Grand Rapids, Michigan Tax Preparation Services

Did you sell stocks, bonds, mutual funds, cryptocurrency, or other investments during the tax year? If so, you may need to report the transactions on your federal income tax return. Even if your brokerage account automatically reports your sales to the IRS, you are still responsible for ensuring that the information on your tax return is accurate.

IRS Form 8949, Sales and Other Dispositions of Capital Assets, helps taxpayers report individual investment transactions, calculate gains and losses, and account for adjustments that may affect their taxable income.

For investors and families in Grand Rapids, Kentwood, Wyoming, Middleville, and throughout West Michigan, understanding Form 8949 can help make tax preparation more organized and reduce the risk of reporting errors.

AIM Financial helps individuals and business owners with federal income tax preparation and investment-related tax reporting. This guide explains what Form 8949 does, when it may be required, and how investment sales can affect your tax return.

What Is IRS Form 8949?

IRS Form 8949 is used to report sales and other dispositions of capital assets. The form helps taxpayers calculate the gain or loss from individual transactions and report adjustments when necessary.

Capital assets commonly include investments such as stocks, bonds, mutual funds, and certain digital assets. Other property may also qualify as a capital asset, depending on its use and applicable tax rules.

Form 8949 generally provides information about:

• The description of the asset sold.
• The date the asset was acquired.
• The date the asset was sold or disposed of.
• The proceeds from the transaction.
• The asset’s cost or other tax basis.
• Adjustments to the gain or loss.
• The resulting capital gain or capital loss.

The totals are generally carried to Schedule D (Form 1040), Capital Gains and Losses, which is used to summarize capital transactions and calculate the overall result for the federal income tax return.

Not every transaction requires a separate entry on Form 8949. Certain transactions can be reported directly on Schedule D when IRS reporting conditions are met and no Form 8949 adjustment is required.

You can find the official form at https://www.irs.gov/forms-pubs/about-form-8949.

Who May Need to File Form 8949?

You may need Form 8949 if you sold or otherwise disposed of investments during the tax year.

1. Stock and bond investors

If you sold individual stocks or bonds through a brokerage account, you may need to report the transactions. Your broker will generally provide Form 1099-B or a consolidated tax statement containing sale information.

However, the information provided by a brokerage may not always reflect your correct tax basis or all adjustments required on your return.

2. Mutual fund investors

Selling mutual fund shares can produce a capital gain or loss. Some mutual fund transactions may involve reinvested distributions or other details that affect your cost basis.

Review your brokerage statements carefully to ensure that your purchase information and reported proceeds are consistent with your records.

3. Cryptocurrency and other digital asset investors

Selling, exchanging, or otherwise disposing of certain digital assets can trigger a taxable event. The tax treatment depends on the type of transaction and the taxpayer’s circumstances.

Digital asset reporting requirements are evolving, including broker reporting on Form 1099-DA for applicable transactions beginning with covered transactions in 2025. Taxpayers should not assume that a broker’s reported proceeds alone establish the correct taxable gain or loss.

Keep records of purchase dates, acquisition costs, transaction fees, sales, exchanges, and transfers. Moving digital assets between wallets you own is generally different from selling or exchanging them, so accurate transaction records matter.

4. Taxpayers with investment adjustments

You may also need Form 8949 if your transaction requires an adjustment, such as a wash sale adjustment, a correction to reported basis, or another adjustment specified in the form instructions.

How Do You Calculate a Capital Gain or Loss?

In a straightforward transaction, a capital gain or loss generally starts with the difference between the amount realized from the sale and the asset’s adjusted tax basis.

The amount realized generally begins with the sale proceeds, reduced by applicable selling costs. Your tax basis usually starts with the purchase cost and may be adjusted for certain fees, corporate actions, or other tax-related events.

Consider this simplified example:

Investment transaction	Amount
Original purchase cost	$4,000
Sale proceeds	$5,500
Selling costs	$50
Adjusted amount realized	$5,450
Gain before other adjustments	$1,450

In this example, the investor has a $1,450 gain before considering any other required adjustments.

If the investor sold the investment for less than its adjusted basis, the transaction could produce a capital loss instead. The final tax treatment depends on the transaction, holding period, and applicable tax rules.

What Is the Difference Between Short-Term and Long-Term Capital Gains?

The length of time you own an investment can affect how a gain is taxed.

Short-term capital gains generally arise from capital assets held for one year or less. These gains are generally taxed at ordinary income tax rates.

Long-term capital gains generally arise from capital assets held for more than one year. Many qualifying long-term gains receive preferential federal tax rates, depending on the taxpayer’s taxable income and circumstances.

Special rules may apply to certain assets, investment transactions, and distributions. The acquisition and sale dates should therefore be recorded accurately.

Understanding the holding period can be especially important for investors who sell stocks shortly after purchasing them or who make frequent investment transactions.

What Is a Wash Sale?

A wash sale can occur when you sell stock or securities at a loss and acquire substantially identical stock or securities within the 30 days before or after the sale, subject to the applicable rules.

Wash sale rules can prevent a taxpayer from immediately deducting certain losses. Instead, the disallowed loss is generally added to the basis of replacement shares in a covered transaction, with special rules and exceptions that can affect the outcome.

For example, an investor who sells shares at a loss and quickly buys substantially identical shares may need to adjust the reported loss.

Brokerage statements may identify wash sale adjustments, but taxpayers should review their full transaction history. Transactions across different accounts or involving other circumstances may require additional attention.

How Does Form 8949 Work With Form 1099-B and Schedule D?

These forms have different roles in investment tax reporting.

• Form 1099-B: Generally reports proceeds from broker-handled sales and certain other transactions.
• Form 8949: Reports individual transactions when required and provides a place to make applicable tax adjustments.
• Schedule D: Summarizes capital gains and losses and incorporates information from Form 8949 when applicable.
• Form 1040: Reports the resulting capital gain or loss through the appropriate tax return line.

A Form 1099-B may show proceeds and a reported cost basis, but the broker’s basis information may be incomplete or may not reflect all adjustments needed for your tax return.

For example, inherited investments, gifted property, corporate actions, and certain digital asset transactions can involve special basis rules. If the basis is incorrect or missing, reporting the transaction accurately may require additional documentation.

Can You Deduct Capital Losses?

Capital losses can offset capital gains under the applicable tax rules. If your capital losses exceed your capital gains, you may generally deduct up to $3,000 of the excess loss against other income, or $1,500 if married filing separately, subject to the rules for the tax year.

Any remaining allowable net capital loss generally carries forward to future tax years.

Special limitations can apply, and the tax treatment of investment losses differs from the treatment of losses on personal-use property. Keep prior-year Schedule D records and capital loss carryforward information so that eligible amounts are not overlooked.

Common Form 8949 Mistakes to Avoid

1. Reporting only the proceeds. The sale price alone does not determine your taxable gain or loss. Your basis and applicable adjustments also matter.

2. Assuming brokerage information is always complete. Review Form 1099-B and supporting statements for missing or incorrect information.

3. Overlooking wash sales. Certain losses may require adjustments rather than being deducted immediately.

4. Using incorrect purchase dates or cost basis. Errors can affect whether gains are short-term or long-term and how much tax is owed.

5. Forgetting digital asset transactions. Certain digital asset sales and exchanges may be taxable even if no traditional cash payment was received.

6. Ignoring prior-year capital losses. Eligible carryforward amounts may affect the current year’s tax calculation.

Get Help With Investment Tax Reporting From AIM Financial

Investment tax reporting can become complicated when you have multiple brokerage accounts, mutual funds, inherited investments, wash sales, digital assets, or capital loss carryforwards.

AIM Financial provides tax preparation assistance for individuals and families who need help organizing tax documents and reporting income and investment transactions accurately.

If you are searching for tax preparation in Grand Rapids, Michigan, or tax services in Kentwood, Wyoming, Middleville, and throughout West Michigan, contact AIM Financial to discuss your federal income tax preparation needs.

Whether you sold stocks, realized investment gains, experienced losses, or received a Form 1099-B from your brokerage, reviewing your records before filing can help you identify reporting issues and understand how your transactions affect your return.

Contact AIM Financial today to discuss your tax preparation needs and get help navigating the federal tax rules for capital gains and losses.

Disclaimer: This article is for general educational purposes only and is not individualized tax, legal, or investment advice. Capital gains and losses depend on the asset, holding period, tax basis, transaction history, and applicable tax-year rules. Consult current IRS instructions or a qualified tax professional about your specific situation.