Filing Guides / Form 8949
Form 8949 equity compensation guide
Sale-level gain/loss worksheet where equity basis corrections are applied. This public guide pulls forward the form lines, common errors, evidence requirements, and IRS citations that matter most for equity compensation workflows.
Tax year 2025
Published 2026-03-03
Key lines to validate
Part I checkbox A/B/C (Short-term category)
Select the short-term checkbox that matches how the broker reported basis for each transaction group. Category selection controls where short-term totals flow into Schedule D.
Equity use cases
- • Separate short-term covered and noncovered equity lots.
- • Group short-term RSU/ISO/ESPP sales by basis-reporting status before summarizing totals.
Common errors
- • Combining basis-reported and nonreported short-term lots under one checkbox.
- • Using one category for all short-term lots without checking Form 1099-B basis reporting flags.
Required evidence
- • Form 1099-B detail pages
- • Broker basis-reported indicators
- • Lot-level short-term classification worksheet
Part II checkbox D/E/F (Long-term category)
Select the long-term checkbox that matches basis reporting status for long-term transactions. Category mapping drives long-term totals to the correct Schedule D lines.
Equity use cases
- • Separate long-term covered and noncovered equity lots.
- • Preserve long-term disposition grouping for ISO/ESPP lots with different broker reporting characteristics.
Common errors
- • Placing long-term covered lots in noncovered categories.
- • Mixing Part I and Part II lots due to incorrect holding-period tagging.
Required evidence
- • Form 1099-B long-term section
- • Holding-period worksheet
- • Broker basis reporting flags
Column (a) Description of property
Enter a lot-level description that can be tied back to broker confirms and equity plan records. Keep equity lots separate when acquisition dates or basis adjustments differ.
Equity use cases
- • Distinguish ISO, ESPP, RSU, and open-market lots sold in the same year.
- • Maintain per-lot traceability for audit evidence and corrected-basis support.
Common errors
- • Summarizing multiple equity lots into one line with different basis profiles.
- • Using generic descriptions that cannot be reconciled to broker lot IDs.
Required evidence
- • Broker lot descriptions
- • Trade confirmations
- • Equity plan lot ledger
Column (b) Date acquired
Report the acquisition date used for holding-period classification. For equity awards, acquisition often maps to vest/purchase/exercise date, not grant date.
Equity use cases
- • Determine short-term versus long-term treatment for ISO and ESPP disposition lots.
- • Reconcile acquisition timing for RSU vest and same-day sale activity.
Common errors
- • Using grant date instead of vest/purchase/exercise date.
- • Leaving acquisition date blank where broker reported basis but omitted acquisition data.
Required evidence
- • Form 1099-B acquisition date fields
- • Form 3921/3922 where applicable
- • Employer equity transaction history
Column (c) Date sold or disposed
Use the disposition date for each lot as reported in broker records. This date drives holding-period determination together with column (b).
Equity use cases
- • Classify same-year exercise-and-sale lots as short-term.
- • Validate ESPP qualifying/disqualifying disposition timing windows.
Common errors
- • Using settlement date inconsistently across lots.
- • Aggregating multiple sale dates into one line without support.
Required evidence
- • Broker sale confirmations
- • Form 1099-B sale date fields
- • Lot-level disposition worksheet
Common error playbooks
Form 8949 Adjustment Control
Any equity lot where broker basis does not match tax basis.
- 1. Assign adjustment code and compute signed adjustment amount.
- 2. Validate net gain/loss after adjustment against lot worksheet.
- 3. Carry totals to Schedule D and retain trace file.
Form 8949 Category Bucket Repair
Short-term/long-term or A-F category bucketing is inconsistent with broker reporting.
- 1. Reclassify each transaction into Part I or Part II using holding-period evidence.
- 2. Assign A/B/C or D/E/F category based on basis reporting status for each lot.
- 3. Recompute category subtotals and retie to Schedule D lines.
Form 8949 Evidence Packet Control
Material equity basis adjustments are entered and audit-ready support is required.
- 1. Attach lot-level basis support with W-2 and supplemental compensation references.
- 2. Retain broker lot reports showing original basis and corrected mapping.
- 3. Archive signed preparer review notes for adjustment codes and amounts.
Mini check
Which Form 8949 columns are central to correcting equity basis errors?
Correct answer
Columns (f) and (g)
Why it matters
Adjustment code and amount are entered in columns (f) and (g) for corrected basis treatment.
What is the main purpose of Part I vs Part II on Form 8949?
Correct answer
Separate short-term and long-term transactions
Why it matters
Part I captures short-term and Part II captures long-term transaction reporting.
If you enter an adjustment amount in column (g), what should also be present?
Correct answer
An adjustment code in column (f)
Why it matters
Column (f) provides the code explaining why the column (g) adjustment was required.
