Question

Capital Gains and Losses - Transaction Adjustment Codes

Accepted Answer

Due to IRS changes to the reporting of capital gain/loss transactions, there are now adjustment codes that can apply to a transaction. These adjustment codes are listed below along with information explaining the situation each code represents, as well as information regarding how to properly report the adjustment amount in your return.

These adjustment codes will be included on Form 8949, which will print along with Schedule D. The adjustment amount will also be listed on Form 8949 and will transfer over to Schedule D. For more information, see the IRS Instructions for Schedule D.

To enter an adjustment code for a transaction in TaxAct®:

From within your TaxAct return (Online or Desktop) click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
Click Investment Income to expand the section, then click Gain or loss on the sale of investments
Select Capital gain or loss (Form 1099-B) from the expanded list
Click Add to create a new form, or click Review to review or modify a previously created form
Enter the transaction information on the proceeding screens and select the appropriate adjustment code on the screen titled Investment Sales - Adjustment Codes

How To Complete Form 8949, Columns (f) and (g)
For most transactions, you don't need to complete columns (f) and (g) and can leave them blank. You may need to complete columns (f) and (g) if you got a Form 1099-B or 1099-S (or substitute statement) that is incorrect, if you are excluding or postponing a capital gain, if you have a disallowed loss, or in certain other situations. Details are in the table below. If you enter more than one code in column (f), see More than one code in the instructions for column (g).
IF.....	THEN enter this code in column (f)	AND.....
You received a Form 1099-B (or substitute statement) and the basis shown in box 1e is incorrect	B	If this transaction is reported on a Part I with box B checked at the top or if this transaction is reported on a Part II with box E checked at the top, enter the correct basis in column (e), and enter -0- in column (g). If this transaction is reported on a Part I with box A checked at the top or if this transaction is reported on a Part II with box D checked at the top, enter the basis shown on Form 1099-B (or substitute statement) in column (e), even though that basis is incorrect. Correct the error by entering an adjustment in column (g). To figure the adjustment needed, see the Worksheet for Basis Adjustments in Column (g). Also see Example 4-adjustment for incorrect basis in the instructions for column (h).
You received a Form 1099-B (or substitute statement) and the type of gain or loss shown in box 2 is incorrect TIP: If you received a Form 1099-B (or substitute statement) with the Ordinary box in box 2 checked and the security is a taxable contingent payment debt instrument subject to the noncontingent bond method, enter code "O" for the transaction in column (f) of the appropriate Part of Form 8949 and complete the Worksheet for Contingent Payment Debt Instrument Adjustment in Column (g), later to figure the amount to enter in column (g).	T	Report the transaction on the correct Part of Form 8949, and enter -0- in column (g) on that Part of the form if there are no adjustments needed for the transaction.
You received a Form 1099-B or 1099-S (or substitute statement) as a nominee for the actual owner of the property	N	Report the transaction on Form 8949 as you would if you were the actual owner, but also enter any resulting gain as a negative adjustment (in parentheses) in column (g) or any resulting loss as a positive adjustment in column (g). As a result of this adjustment, the amount in column (h) should be zero. However, if you received capital gain distributions as a nominee, report them instead as described under Capital Gain Distributions in the Instructions for Schedule D (Form 1040).
You sold or exchanged your main home at a gain, must report the sale or exchange on Part II of Form 8949 (as explained in Sale of Your Home in the Instructions for Schedule D (Form 1040)), and can exclude some or all of the gain	H	Report the sale or exchange on Form 8949 as you would if you weren't taking the exclusion. Then enter the amount of excluded (nontaxable) gain as a negative number (in parentheses) in column (g). See the example in the instructions for column (g).
You received a Form 1099-B showing accrued market discount in box 1f	D	Use the Worksheet for Accrued Market Discount Adjustment in Column (g), later, to figure the amount to enter in column (g). However: If you received a partial payment of principal on a bond, don't use the worksheet. Instead, enter the smaller of the accrued market discount or your proceeds in column (g). Also report it as interest on your tax return. If you chose to include market discount in income currently, enter -0- in column (g). Before figuring your gain or loss, increase your basis in the bond by the market discount you have included in income for all years. See the instructions for code B above. If the disposition of a market discount bond results in a loss subject to the wash sale rules, enter only "W" in column (f) and follow the instructions for code "W" below.
You sold or exchanged qualified small business stock and can exclude part of the gain	Q	Report the sale or exchange on Form 8949 as you would if you weren't taking the exclusion and enter the amount of the exclusion as a negative number (in parentheses) in column (g). However, if the transaction is reported as an installment sale, see Gain from an installment sale of QSB stock in the Instructions for Schedule D (Form 1040).
You can exclude all or part of your gain under the rules explained in the Schedule D instructions for DC Zone assets or qualified community assets	X	Report the sale or exchange on Form 8949 as you would if you weren't taking the exclusion. Then enter the amount of the exclusion as a negative number (in parentheses) in column (g).
You are electing to postpone all or part of your gain under the rules explained in the Schedule D instructions for any rollover of gain (for example, rollover of gain from QSB stock or publicly traded securities)	R	Report the sale or exchange on Form 8949 as you would if you weren't making the election. Then enter the amount of postponed gain as a negative number (in parentheses) in column (g).
You have a nondeductible loss from a wash sale	W	Report the sale or exchange on Form 8949 and enter the amount of the nondeductible loss as a positive number in column (g). See the Schedule D instructions for more information about wash sales generally and Pub. 550 for more information on wash sales involving substantially similar stock or securities. If you received a Form 1099-B (or substitute statement) and the amount of nondeductible wash sale loss shown in box 1g is incorrect, enter the correct amount of the nondeductible loss as a positive number in column (g). If the amount of the nondeductible loss is less than the amount shown on Form 1099-B (or substitute statement), attach a statement explaining the difference. If no part of the loss is a nondeductible loss from a wash sale transaction, enter -0- in column (g).
You have a nondeductible loss other than a loss indicated by code W	L	Report the sale or exchange on Form 8949 and enter the amount of the nondeductible loss as a positive number in column (g). See Nondeductible Losses in the Instructions for Schedule D (Form 1040).
You received a Form 1099-B or 1099-S (or substitute statement) for a transaction and there are selling expenses or option premiums that aren't reflected on the form or statement by an adjustment to either the proceeds or basis shown	E	Enter in column (d) the proceeds shown on the form or statement you received. Enter in column (e) any cost or other basis shown on Form 1099-B (or substitute statement). In column (g), enter as a negative number (in parentheses) any selling expenses and option premium that you paid (and that aren't reflected on the form or statement you received) and enter as a positive number any option premium that you received (and that isn't reflected on the form or statement you received). For more information about option premiums, see Gain or Loss From Options in the Instructions for Schedule D (Form 1040).
You had a loss from the sale, exchange, or worthlessness of small business (section 1244) stock and the total loss is more than the maximum amount that can be treated as an ordinary loss	S	See Small Business (Section 1244) Stock in the Schedule D (Form 1040) instructions.
You disposed of collectibles (see the Schedule D instructions)	C	Enter -0- in column (g). Report the disposition on Form 8949 as you would report any sale or exchange.
You report multiple transactions on a single row as described in Exception 2 or Special provision for certain corporations, partnerships, securities dealers, and other qualified entities under Exceptions to reporting each transaction on a separate row	M	See Exception 2 and Special provision for certain corporations, partnerships, securities dealers, and other qualified entities under Exceptions to reporting each transaction on a separate row. Enter -0- in column (g) unless an adjustment is required because of another code.
You have an adjustment not explained earlier in this column	O	Enter the appropriate adjustment amount in column (g).See the instructions for column (g).
None of the other statements in this column apply	Leave columns (f) and (g) blank.

* This code is automatically calculated and included on Form 8949 based upon the entries you have made to Schedule D - Sale of Home Worksheet. To make entries for this code you will need to go directly to this worksheet.