What this line means
The total long-term gains and losses from assets reported on Form 8949 with Box E checked — meaning your broker reported the sale to the IRS but did not report the cost basis. These are assets held more than one year. You must determine and report the correct cost basis yourself.
Does this apply to you?
- You sold long-held assets where the broker’s 1099-B shows proceeds but no cost basis — common for stocks purchased before 2011 when cost basis reporting became mandatory
- You sold inherited assets where the broker did not have the date-of-death fair market value on file
- You transferred shares between brokers years ago and the cost basis did not follow
- You sold shares from an employee stock purchase plan where the broker did not track the discount adjustment
Easy to overlook
Pre-2011 stock purchases have no broker-reported basis Brokers were not required to track and report cost basis to the IRS until 2011 for stocks, 2012 for mutual funds, and 2014 for bonds and options. 1 If you bought shares before then, your 1099-B will show the proceeds but not the basis. You need your original purchase records to calculate basis. Without them, you will overpay. IRS Schedule D instructions — Line 8b
ESPP shares have a basis adjustment the broker misses If you bought shares through an employer stock purchase plan at a discount, part of that discount is reported as W-2 income. Your cost basis should include the amount already taxed as wages, which your broker often does not reflect. Without this adjustment, you pay tax on the discount twice. 2 CP2000 pattern — missing long-term cost basis
Watch out for this
Leaving cost basis blank because the 1099-B did not include it. The IRS receives only the proceeds from your broker. If you do not supply the basis, the IRS treats your entire sale as profit. For long-held investments, this can mean a tax bill on decades of reinvested dividends and the original purchase price — money that should not be taxed.
Footnotes
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IRS Schedule D (Form 1040) Instructions, Line 8b. https://www.irs.gov/instructions/i1040sd ↩
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IRS CP2000 Notice, Cost Basis Reporting. https://www.irs.gov/individuals/understanding-your-cp2000-notice ↩