What this line means
The total short-term gains and losses from assets reported on Form 8949 with Box B checked — meaning your broker reported the sale to the IRS but did not report the cost basis. You held these assets for one year or less. You are responsible for determining and reporting the correct cost basis yourself.
Does this apply to you?
- You sold assets where your broker’s 1099-B shows proceeds but the cost basis box is blank or marked “not reported”
- You transferred shares between brokers before selling, and the receiving broker did not have your original purchase price
- You inherited assets and sold them within a year, where the broker did not have the stepped-up basis on file
- You received stock through a corporate action (spin-off, merger) where the broker could not calculate the new basis
Easy to overlook
Transferred shares lose their basis at the new broker When you move shares from one brokerage to another, the cost basis does not always transfer. The new broker reports the sale to the IRS without basis, making it look like pure profit. You need to look up the original purchase price at the old broker and report it on Form 8949 yourself. 1 IRS Schedule D instructions — Line 1b
The IRS assumes zero basis if you leave it blank If your 1099-B does not show cost basis and you do not report it on Form 8949, the IRS treats the entire sale proceeds as taxable gain. This is the single most common reason investors receive inflated CP2000 notices. Always fill in the basis, even if you need to dig through old statements to find it. 2 CP2000 pattern — missing cost basis on short-term sales
Watch out for this
Leaving the cost basis column blank on Form 8949 because the 1099-B was blank. The IRS matches the reported proceeds against your return. With no basis reported, the IRS computer calculates your gain as 100% of the sale price and sends a notice for the difference in tax owed.
Footnotes
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IRS Schedule D (Form 1040) Instructions, Line 1b. 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 ↩