Form 1099-B - Nominees

The following will assist with the entry of Form 1099-B Proceeds From Broker and Barter Exchange Transactions when the income belongs to someone else.

Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), page 66:

Nominees. If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949.

File Form 1099-B or Form 1099-S with the IRS. If you received gross proceeds as a nominee in 2019, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. Send the Form 1099-B or Form 1099-S with a Form 1096 to your Internal Revenue Service Center by February 28, 2020 (March 31, 2020, if you file Form 1099-B or Form 1099-S electronically). Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2020. On Form 1099-B, you should be listed as the “Payer.” The actual owner should be listed as the “Recipient.” On Form 1099-S, you should be listed as the “Filer.” The actual owner should be listed as the “Transferor.” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns.

Note. The entry of your nominee income is automatically handled by the TaxAct program if Code N is selected as the adjustment code when entering the Form 1099-B in the program.

This would only need to be done on the taxpayer's return to which the Form 1099-B was issued (i.e. the person whose social security number was listed on the form issued by the financial institution). The other taxpayers' return(s) would include the amount from the Form 1099-B issued by you to them as outlined below.

TIP: If you received income as a nominee, you must give the actual owner a Form 1099-B unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-B with the IRS. For more details, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) and the Instructions for Forms 1099-B.

Note. The IRS uses this process to receive ownership information that helps determine which return will contain the income.

To enter or review information from Form 1099-B Capital Gain Transaction Details:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
  2. Click Investment Income to expand the category and then click Gain or loss on the sale of investments to expand that section
  3. Click Capital gain or loss (Form 1099-B)
  4. Click +Add Form 1099-B to create a new copy of the form or click Review to review a form already created 
  5. Click Quick Entry or Step-by-Step Guidance 
    1. If you select Quick Entry, fill in the form to match your paper copy of Form 1099-B and be sure to scroll down to answer questions.  In Box 1f, be sure to select code "N" for Received Form 1099-B as a nominee
    2. If you select Step-by-Step Guidance, the program will proceed with the interview questions for you to enter or review the appropriate information. Watch for the screen titled Investment Sales - Adjustment Code(s) to enter the nominee code.