What is Form 8949 used for?

Form 8949 reports the sale or disposition of capital assets: stocks, bonds, digital assets, and other property, so the IRS can check what a broker reported on Form 1099-B or 1099-DA against what the taxpayer reports on the return. Every transaction gets listed with its proceeds, basis, and gain or loss, and the form's totals then flow to Schedule D, where short-term and long-term gains combine into the client's overall capital gain or loss for the year. Any return with a reportable sale of a capital asset needs Form 8949, unless a specific exception lets the preparer report directly on Schedule D instead.

Which box does a transaction go in?

Two things decide the box: how long the client held the asset, and whether the broker reported cost basis to the IRS. Short-term transactions (held one year or less) go in Part I. Long-term transactions (held more than one year) go in Part II. Within each part, the box comes from the basis-reporting code printed on the 1099-B or 1099-DA:

• Box A (short-term) / Box D (long-term): basis was reported to the IRS on Form 1099-B.

• Box B (short-term) / Box E (long-term): basis was not reported to the IRS, or the statement doesn't show basis at all.

• Box C (short-term) / Box F (long-term): no 1099-B or substitute statement was received for the transaction at all.

Take a client who sold 200 shares of a stock held four years. If the 1099-B shows "basis reported," that transaction is Box D. If the same client also sold shares from an old DRIP account where the broker never had cost-basis records, that sale is Box E, even though it is long-term too, and even though it sits on the same 1099-B page as the Box D shares. A preparer reads the checkbox on the client's actual 1099-B for each lot. Guessing from the brokerage's summary page is how a Box D transaction ends up filed as Box E, and the box choice controls whether the IRS is already holding a basis figure to match against the return.

What changed for digital assets in the 2025 tax year?

Starting with tax year 2025, digital asset sales reported on the new Form 1099-DA get their own boxes on Form 8949, separate from the stock and bond boxes. Short-term digital asset transactions use Box G (basis reported to the IRS), Box H (basis not reported), or Box I (no 1099-DA received). Long-term digital asset transactions use the parallel Box J, Box K, or Box L. The IRS instructions are direct about this: "Do not use box C to report short-term digital asset transactions. Use box I," with the same rule applying to box F versus box L on the long-term side. A firm handling any client with crypto activity in 2025 now has six extra boxes on the intake checklist that stock-only preparers never had to think about.

How does column (e) basis reporting work once the box is picked?

The box picked in Part I or Part II determines what goes in column (e), basis. If the 1099-B or 1099-DA shows basis was reported to the IRS (boxes A, D, G, or J), the preparer reports that same basis figure in column (e), even if the preparer believes the broker's number is wrong. The correction in that case goes in column (g) with adjustment code B, not by quietly changing column (e) to match what the preparer thinks is right. If basis wasn't reported to the IRS (boxes B, E, H, or K) or there's no 1099 at all (boxes C, F, I, or L), the preparer enters the correct basis directly, usually pulled from trade confirmations or the client's own cost records.

Say a client's broker reports basis of $12,000 on a Box A lot, but the client's own records (and a stock split the broker never adjusted for) put the real basis at $15,000. Column (e) still shows $12,000, matching the broker. Column (g) carries a $3,000 adjustment with code B, and column (h) reflects the corrected gain. Overwrite column (e) instead, and the return no longer matches what the IRS already has on file for that transaction.

Why does the box selection matter for a CPA firm's workflow?

Getting the box wrong doesn't change the math on a simple return, but it does trigger an IRS matching mismatch, because the IRS checks its own copy of the 1099-B or 1099-DA against the box and basis reported on Form 8949. A return that reports "basis not reported" (box B, E, H, or K) for a transaction where the broker actually did report basis to the IRS shows up as a discrepancy in IRS systems and can generate a CP2000 notice months after filing, long after the client has stopped thinking about the return.

This is one of the more common errors a reviewer catches on a busy-season file: a junior preparer re-keys a 400-line brokerage statement by hand, mixes up a handful of Box A and Box B lots because the summary page groups them differently than the detail pages do, and the return goes out clean. Nothing looks wrong until the CP2000 arrives eight months later asking why the IRS's basis figure doesn't match the return's. Firms processing volume brokerage statements do better having 1099-B and 1099-DA basis-reporting codes extracted and box-matched automatically instead of re-keyed line by line, since manual re-keying on high-line-count statements is exactly where these mismatches get introduced.