Introduction

This chapter explains the tax treatment of sales and trades of investment property.

Investment property. This is property that produces investment income. Examples include stocks, bonds, and Treasury bills and notes. Property used in a trade or business is not investment property.

Digital assets. A digital asset is a digital representation of value that is recorded on a cryptographically secured distributed ledger or any similar technology. A digital asset is treated as property, and general tax principles that apply to property transactions apply to transactions using digital assets, including how to figure your holding period for short-term and long-term capital gains and losses explained later under Long-term or Short-term. Digital assets include property that has been referred to as “convertible virtual currency,” “cryptocurrency,” and “non-fungible tokens.” If a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal income tax purposes. For more information on the tax treatment of digital assets, see Notice 2014-21, 2014-16 I.R.B. 938, available at IRS.gov/irb/2014-16 IRB#NOT-2014-21, (as modified by Notice 2023-34, 2023-19 I.R.B. 837, available at IRS.gov/irb/2023-19 IRB#NOT-2023-34 ), Rev. Rul. 2019-24, 2019-44 I.R.B. 1004, available at IRS.gov/irb/2019-44 IRB#REV- RUL-2019-24 , Rev. Rul. 2023-14, 2023-33 I.R.B. 484, available at IRS.gov/irb/2023-33 IRB#REV-RUL-2023-14, Rev. Proc. 2024-28, 2024-31 I.R.B. 326, available at IRS.gov/irb/2024-31 IRB#REV-PROC-2024–28 , and IRS.gov/VirtualCurrencyFAQs . For more information on the tax treatment of property transactions and on short-term and long-term capital gains and losses, see Pub. 544, Sales and Other Dispositions of Assets.

Form 1099–DA. Form 1099-DA was created for brokers to report the required information about digital asset transactions to the IRS.

For the latest information about developments related to Form 1099-DA and its instructions, such as legislation enacted after they were published, go to IRS.gov/ Form1099DA .

For further guidance, taxpayers may also refer to Treas- ury Decision 10000, published July 9, 2024.

Form 1099-B. If you sold stocks, bonds, mutual funds, or certain commodities through a broker during the year, the broker should send you a Form 1099-B, Proceeds From

52 Chapter 4 Sales and Trades of Investment Property Publication 550 (2025)

Broker and Barter Exchange Transactions, for each sale. You should receive the Form 1099-B for 2025 by February 16, 2026. It will show the gross proceeds from the sale. The IRS will also get a copy of Form 1099-B from the broker.

Use the Form 1099-B that you received from your broker to complete Form 8949, Sales and Other Dispositions of Capital Assets. If you sold a covered security in 2025, your broker should send you a Form 1099-B that shows your basis. This will help you complete Form 8949. Generally, a covered security is a security you acquired after 2010, with certain exceptions. For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in this chapter. Also see the In- structions for Form 8949 and the Instructions for Schedule D (Form 1040).

Useful Items You may want to see:

Publication

544

551

544 Sales and Other Dispositions of Assets

551 Basis of Assets

Form (and Instructions)

Schedule D (Form 1040)

Schedule D (Form 1040) Capital Gains and Losses

1099-DA 1099- D A igital Asset Proceeds from Broker

Transactions

6781 6781 Gains and Losses From Section 1256

Contracts and Straddles

8582 Passive Activity Loss Limitations

8824 Like-Kind Exchanges

8949 Sales and Other Dispositions of Capital Assets

Nominees. If someone receives gross proceeds as a nominee, that person will give you a Form 1099-B, which will show gross proceeds received on your behalf.

If you receive a Form 1099-B that includes gross proceeds belonging to another person, see Nominees , later, under Reporting Capital Gains and Losses for more infor- mation.

Other property transactions. Certain transfers of property are discussed in other IRS publications. These include:

• Sale of your main home, discussed in Pub. 523, Selling Your Home;

• Installment sales, covered in Pub. 537, Installment Sales;

• Various types of transactions involving business property, and digital assets, discussed in Pub. 544;

• Transfers of property at death, covered in Pub. 559, Survivors, Executors and Administrators; and

• Disposition of an interest in a passive activity, discussed in Pub. 925, Passive Activity and At-Risk Rules.

Topics This chapter discusses:

• What Is a Sale or Trade ,

• Basis of Investment Property ,

• Adjusted Basis,

• How To Figure Gain or Loss ,

• Nontaxable Trades,

• Transfers Between Spouses ,

• Related Party Transactions,

• Capital Gains and Losses,

• Reporting Capital Gains and Losses, and

• Special Rules for Traders in Securities or Commodities .

See chapter 5, How To Get Tax Help , for information about getting these publications and forms.