How Do You Report a Sale When Basis Wasn’t Reported? (w/Examples) + FAQs

This article reflects federal IRS rules as of June 2026 and covers tax year 2025 (returns filed in the 2026 filing season). State rules are addressed separately below. Tax law changes — confirm current figures before you file.

Quick Answer

You report it on Form 8949, check Box B (short-term) or Box E (long-term) for “basis not reported to the IRS,” enter your own cost basis in column (e), then carry the totals to Schedule D. You must supply the basis yourself; the broker didn’t.

When your Form 1099-B shows the cost basis was not reported to the IRS, the IRS sees only your sale proceeds — not what you paid. If you leave basis blank or report it wrong, the IRS can treat your entire sale amount as profit and bill you for tax you may not actually owe.

This happens most often with “noncovered” securities — older shares, inherited stock, gifted stock, transferred accounts, and many crypto sales — where the law never required the broker to track or report your purchase price. According to Vanguard’s cost basis guidance, you remain responsible for reporting basis on every sale, covered or noncovered, on Form 8949 and Schedule D. Getting this right protects your refund and keeps an automated IRS notice out of your mailbox.

🧾 How to read your 1099-B and tell whether basis was reported to the IRS or not.
✅ Exactly which Form 8949 box to check (B, E, and the new digital-asset boxes) and what goes in each column.
💵 Worked examples with real dollar figures — including inherited stock, RSUs, and crypto — so you can copy the math.
🛠️ How to rebuild your cost basis when your records are gone, step by step.
⚠️ The costly mistakes that trigger a CP2000 notice — and how to avoid every one.

What “Basis Wasn’t Reported” Actually Means

Cost basis is what you paid for an investment, including commissions and fees. You subtract it from your sale proceeds to find your taxable gain or loss. “Basis wasn’t reported” means your broker sent you a 1099-B that lists the sale but did not tell the IRS what you paid.

This is not a mistake or an oversight. Federal law splits securities into two groups, and the rules are different for each. The split decides whether the broker must report basis to the IRS at all.

A covered security is one the broker must track and report basis on. A noncovered security is one the broker does not have to report basis on, even if it shows the number on your copy as a courtesy. Per the 2025 IRS Form 1099-B instructions, a noncovered security generally includes stock bought before 2011, mutual fund shares and dividend-reinvestment shares bought before 2012, and debt instruments, options, and securities futures acquired before 2014.

The consequence of ignoring this is direct and expensive. If you don’t fill in your own basis, the IRS computer assumes your basis is zero and treats the full sale price as gain. As Schwab explains, noncovered basis still must be reported by you — the broker just isn’t required to send it to the IRS.

A common misconception is that “not reported to the IRS” means “not taxable” or “you don’t have to report it.” The opposite is true. The sale is fully reportable; the only thing missing is the broker’s basis report, and that gap is now your job to fill.

What you should do: Pull every 1099-B and brokerage statement, look at each line, and sort sales into “basis reported” and “basis not reported” piles before you touch any tax form.

How to Read Your 1099-B Box by Box

Your 1099-B tells you, line by line, whether basis went to the IRS. The single most important field is the “Applicable checkbox on Form 8949” marker near the top of each section, which maps directly to a box on Form 8949.

Two specific boxes settle the question. According to the IRS Form 8949 instructions, if box 12 is checked, basis was reported to the IRS (you’ll use Box A or D). If box 12 is not checked, basis was not reported (you’ll use Box B or E).

Box 5 is the other flag. As Edward Jones notes on its 2025 1099-B, when Box 5 is checked the security is “noncovered,” and the basis in Box 1e is not reported to the IRS — even if a dollar figure appears there.

Here are the fields that decide your reporting:

Box 1b — date acquired: may be blank on noncovered shares; you supply it from your records.
Box 1e — cost or other basis: may be blank, may show a number, or may show “noncovered.” Blank means you must supply it.
Box 2 — short-term vs. long-term: if marked “ordinary” or left blank with code X, use your own records to set the holding period.
Box 5 — noncovered security: if checked, basis was not reported to the IRS.
Box 12 — basis reported to IRS: unchecked means basis was not reported.

A frequent error is trusting a dollar amount in Box 1e even when the security is noncovered. That number is a courtesy estimate, not an IRS-reported figure, and it can be wrong if you moved the shares between brokers.

What you should do: For every line, write “B,” “E,” “A,” or “D” next to it based on box 12 and the holding period before you open Form 8949.

Which Situation Applies to You?

The answer depends on why basis is missing. Find your situation below, then jump to the matching example.

Old shares you bought years ago (noncovered): the broker never had to track basis. You rebuild it from your own records — go to the worked example.
Inherited stock: your basis is usually the value on the date the person died (the “stepped-up basis”), and it is almost always long-term. See Maria’s inherited-stock example.
Gifted stock: your basis is generally the giver’s original cost (carryover basis), with a special rule for losses.
RSUs, ESPP, or stock options: the broker often reports a basis that is too low because it leaves out the income you already paid tax on. You adjust it — see the RSU double-tax trap.
Cryptocurrency and digital assets: many sales arrive with no basis at all, and 2025 introduces new Form 8949 boxes just for them. See the digital-asset section.
No 1099-B at all: you still must report the sale; use Box C (short-term) or Box F (long-term).

Each path lands on the same two forms — Form 8949 and Schedule D — but the basis you enter and the box you check differ. Picking the wrong box or skipping the adjustment is what triggers an IRS notice.

Form 8949: The Column-by-Column Walkthrough

Form 8949 is where the IRS and you reconcile what was reported against what you actually report. Per the IRS instructions, you complete Form 8949 before you fill in Schedule D, and you use a separate Part for each box type.

You check one box per page. Short-term, basis-not-reported sales go on Part I, Box B. Long-term, basis-not-reported sales go on Part II, Box E. If you have both, you use two separate pages.

Here is what each column needs for a basis-not-reported sale:

Column (a) — description: the asset and number of shares, such as “100 sh XYZ Corp.”
Column (b) — date acquired: your purchase date; enter “INHERITED” for inherited property or “VARIOUS” if bought on many dates.
Column (c) — date sold: the trade date of the sale.
Column (d) — proceeds: the sale price exactly as shown on the 1099-B.
Column (e) — cost or other basis: your basis — this is the number the broker didn’t report.
Column (f) — code: a letter only if you need an adjustment (for example, “B” if a basis shown on the 1099-B is wrong).
Column (g) — adjustment: the dollar amount of any correction.
Column (h) — gain or loss: column (d) minus column (e), plus or minus column (g).

The consequence of an empty column (e) is severe: the IRS reads a blank basis as zero and taxes the entire sale. A real example — sell $40,000 of stock you paid $35,000 for, and a blank column (e) turns a true $5,000 gain into a $40,000 phantom gain.

What you should do: Fill column (e) for every line, even noncovered ones, and double-check that column (h) equals proceeds minus basis before you total the page.

When the 1099-B Shows a Basis but It’s Wrong

Sometimes the broker reports a basis to the IRS (box A or D), but the number is wrong — common with RSUs, ESPP shares, and transferred accounts. You do not erase the wrong number. You report it and then adjust.

Per the IRS Form 8949 code table, you enter the basis shown on the 1099-B in column (e), put code B in column (f), and enter the correction in column (g). If the correct basis is higher than shown, the adjustment is a negative number in parentheses; if the correct basis is lower, it’s a positive number.

The consequence of skipping this adjustment is paying tax twice on the same money — the classic RSU trap, where the broker’s basis omits the compensation income already taxed on your W-2.

What you should do: Compare the broker’s basis to your own records, and if they differ, use code B and column (g) rather than silently changing column (e).

Worked Example: Noncovered Stock, Step by Step

Let’s run the full math on a long-term, basis-not-reported sale for tax year 2025.

The facts: In 2009, you bought 200 shares of a company for $18 per share, paying a $10 commission. In 2025, you sold all 200 shares for $55 each, with a $9 commission. The 1099-B shows proceeds but box 12 is unchecked — basis was not reported.

Here is the calculation:

Cost basis: 200 × $18 = $3,600, plus the $10 buy commission = $3,610.
Proceeds: 200 × $55 = $11,000, minus the $9 sell commission = $10,991.
Long-term gain: $10,991 − $3,610 = $7,381.

On Form 8949 Part II, you check Box E, enter “200 sh” in column (a), the 2009 date in (b), the 2025 sell date in (c), $10,991 in (d), $3,610 in (e), leave (f) and (g) blank, and enter $7,381 in (h). That $7,381 long-term gain flows to Schedule D and is taxed at favorable long-term capital gains rates — 0%, 15%, or 20% depending on your 2025 taxable income.

Had you left column (e) blank, the IRS would tax the full $10,991 as gain — costing roughly $1,107 in extra federal tax at a 15% rate on the $7,381 you’d wrongly omit.

Named Examples

Maria and the inherited shares. Maria’s father died in March 2025, leaving her 500 shares worth $90 each that day. He had paid $12 a share decades earlier. Because of the stepped-up basis rule, Maria’s basis is the date-of-death value — $45,000 — not his $6,000. She sells in late 2025 for $46,000, reports it on Form 8949 Part II Box E with “INHERITED” in column (b), and owes tax on just a $1,000 long-term gain instead of $40,000.

James and the RSU double-tax trap. James sold vested RSUs in 2025. His 1099-B reported basis to the IRS (Box D) of $0, but $24,000 of vesting income already appeared on his W-2. He keeps the $0 in column (e), enters code B in column (f), and puts ($24,000) in column (g) as a negative adjustment. This fixes his true gain and stops him from paying tax twice on the same $24,000.

Priya and the crypto with no basis. Priya sold $8,000 of Bitcoin in 2025 on an exchange that sent no basis. She finds her 2021 purchase records showing she paid $5,200. She reports the sale on Form 8949 using the new long-term digital-asset Box K, enters $5,200 in column (e), and reports a $2,800 long-term gain — not the $8,000 the IRS would otherwise assume.

Digital Assets: The New 2025 Boxes

Crypto reporting changed for tax year 2025. The IRS Form 8949 instructions add brand-new boxes specifically for digital assets, and you may not use the old boxes C or F for them.

For short-term digital-asset sales, use Box G, H, or I in Part I. For long-term digital-asset sales, use Box J, K, or L in Part II. Within each set, the box still depends on whether basis was reported to the IRS, with the “not reported” choices being Box H (short-term) and Box K (long-term).

The basis of a digital asset is its acquisition cost, including transaction fees and commissions. Because many platforms historically reported no basis, you will often supply it yourself from exchange records or wallet history.

What you should do: Match each crypto sale to the correct new box, and gather acquisition records now — the IRS has steadily expanded digital-asset reporting, so a zero-basis assumption is the costly default if you stay silent.

Three Common Scenarios

Scenario 1 — Noncovered stock, blank basis box.

If your 1099-B looks like this	Then here’s what happens
Box 12 unchecked, Box 1e blank	You supply your own basis in column (e), check Box B or E, and report the real gain
You leave column (e) blank	The IRS treats basis as $0 and taxes the entire sale price

Scenario 2 — RSU basis reported but too low.

If your 1099-B looks like this	Then here’s what happens
Box D checked, basis shows $0 but W-2 already taxed the vesting	You enter code B and a negative column (g) adjustment to add back the taxed income
You accept the $0 basis as-is	You pay capital gains tax a second time on income already taxed on your W-2

Scenario 3 — Crypto sale with no basis statement.

If your situation looks like this	Then here’s what happens
Exchange sent proceeds but no basis	You use the new digital-asset box (H or K) and enter your own basis from records
You don’t report the sale at all	The IRS can assess tax on the full proceeds plus penalties and interest

Deadlines, Costs, and Timing

Your 2025 return is due April 15, 2026, with a six-month extension to October 15, 2026 available — but an extension to file is not an extension to pay. Missing the payment deadline triggers a failure-to-pay penalty of 0.5% of unpaid tax per month plus interest.

A do-it-yourself return using tax software handles Form 8949 and Schedule D for a modest filing fee, often importing 1099-B data automatically. Hiring a CPA for a return with messy noncovered or crypto basis typically runs a few hundred dollars and up, depending on the number of transactions and how much basis reconstruction is needed.

If the IRS later sends a CP2000 notice because your reported gain didn’t match the proceeds it received, you generally have 30 days to respond. Answering on time with your basis records usually clears it without an audit; ignoring it converts a proposed adjustment into an assessed bill.

How to Rebuild Basis When Your Records Are Gone

Missing records are the single biggest pain point with noncovered shares. You are not allowed to skip the basis — but you are allowed to reconstruct a reasonable figure.

The IRS instructions say plainly that if you lost or didn’t keep records, you should first contact your broker, who may still have your basis in box 1e even on noncovered shares. Start there before reconstructing anything by hand.

If the broker can’t help, rebuild basis from these sources:

Old trade confirmations, monthly statements, or year-end summaries from any prior brokerage.
Historical price data for the stock on your purchase date, adjusted for splits, spinoffs, and dividend reinvestments.
Estate documents or a date-of-death appraisal for inherited shares.
Grant and vesting statements plus old W-2s for RSU, ESPP, or option shares.

The consequence of guessing carelessly is that an unsupported basis can be disallowed on audit, dropping your basis toward zero. Keep a written record of how you calculated each number so you can defend it.

What you should do: Document your method and save the supporting data with your tax file for at least three years after filing — the standard IRS audit window.

Mistakes to Avoid

Leaving column (e) blank. The IRS reads a blank basis as zero and taxes your entire sale price.
Checking the wrong box. Reporting a basis-not-reported sale under Box A or D mismatches IRS records and can trigger a CP2000 notice.
Trusting a noncovered basis figure blindly. The courtesy number in box 1e can be wrong, especially after a transfer between brokers.
Skipping the RSU/ESPP adjustment. Accepting a too-low reported basis makes you pay tax twice on income already on your W-2.
Using old boxes C or F for crypto. For 2025, digital assets require the new boxes G–L; the wrong box flags your return.
Forgetting the stepped-up basis on inherited stock. Using the deceased’s original cost instead of date-of-death value inflates your gain enormously.
Reporting proceeds that don’t match the 1099-B. Always enter column (d) exactly as the broker reported it, then adjust elsewhere if needed.
Treating “basis not reported” as “not taxable.” The sale is fully reportable; only the broker’s basis report is missing.

Do’s and Don’ts

Do enter your own basis in column (e) for every noncovered sale, because the IRS otherwise assumes zero.
Do check Box B for short-term and Box E for long-term basis-not-reported sales, because each box type needs its own page.
Do use code B and column (g) when a reported basis is wrong, because it fixes the gain without hiding the original figure.
Do keep records that support every reconstructed basis, because an unsupported number can be disallowed.
Do report the proceeds exactly as shown on the 1099-B, because mismatches trigger automated notices.
Don’t leave a sale off your return because no basis was reported, because the IRS still received the proceeds.
Don’t change a reported basis directly in column (e), because that erases the figure the IRS already has on file.
Don’t assume your state follows the federal treatment, because conformity varies widely.
Don’t guess at basis without documentation, because audits target unsupported numbers.
Don’t miss the CP2000 response window, because silence turns a proposal into a bill.

Pros and Cons of Reporting Your Own Basis

Pro: You can claim your real basis and slash a phantom gain, because the law lets you report basis the broker didn’t.
Pro: Inherited stock often gets a stepped-up basis, because it can wipe out most of the gain.
Pro: Correcting an RSU basis prevents double taxation, because the W-2 income is added back.
Pro: Accurate reporting avoids penalties and interest, because your figures match the IRS records.
Pro: You control the holding-period classification on noncovered shares, because you set the dates from your records.
Con: You carry the recordkeeping burden, because the broker won’t supply or defend the basis.
Con: Reconstructing old basis takes time, because statements and split history can be hard to find.
Con: Unsupported figures risk audit adjustment, because the IRS can disallow basis it can’t verify.
Con: Crypto and multi-broker transfers add complexity, because basis often doesn’t follow the asset.
Con: Errors can trigger a CP2000, because the IRS matches your gain against reported proceeds.

Federal vs. State Treatment

Start with the federal rule, then check your state — they are not always the same.

Federal treatment	State treatment
Report on Form 8949 and Schedule D; favorable long-term capital gains rates of 0%, 15%, or 20% for 2025	Many states tax capital gains as ordinary income at the regular state rate
Stepped-up basis applies to inherited assets	Most states follow the federal basis, but a few have their own rules
No state involvement in federal forms	Nine states — including Florida, Texas, and Washington’s wage income — levy no broad personal income tax on this

States that levy no broad personal income tax — such as Florida, Texas, Nevada, South Dakota, Wyoming, Alaska, and Tennessee — generally do not tax these gains at the state level, which is a complete and valuable answer for residents there. States that do tax income usually start from your federal capital gain figure, so getting the federal Form 8949 right also fixes your state number. Always confirm your specific state’s rules with its department of revenue, because conformity to federal capital-gains treatment genuinely varies.

When to Call a Professional

This article is educational and is not a substitute for advice from a licensed tax professional about your specific situation. Most simple noncovered-stock sales are well within reach of good tax software.

Consider hiring a CPA or tax attorney when your situation involves an estate with many inherited assets, large RSU or ESPP positions with reported-but-wrong basis, years of unreported crypto, missing records on a large gain, or a CP2000 notice you don’t know how to answer. The cost of professional help is usually small next to the tax, penalties, and interest a single large basis error can create.

What to Do Next

Gather every 1099-B and brokerage statement, then sort each sale into “basis reported” and “basis not reported.”
Reconstruct missing basis from old statements, broker records, estate documents, or W-2s, and save your work.
Complete Form 8949, checking Box B or E (or the new digital-asset boxes) and entering your basis in column (e).
Carry the totals to Schedule D and then to Form 1040, double-checking that each column (h) equals proceeds minus basis.
File by April 15, 2026 (or October 15, 2026 with an extension), and keep your basis records at least three years.
Respond within 30 days to any CP2000 notice with your basis documentation rather than ignoring it.

FAQs

What does “basis not reported to the IRS” mean on my 1099-B? It means the broker listed your sale but did not tell the IRS what you paid. This happens with noncovered securities. You must supply your own cost basis in column (e) of Form 8949 for tax year 2025.

Which Form 8949 box do I check when basis wasn’t reported? Box B for short-term sales and Box E for long-term sales. Each box type goes on its own Part I or Part II page, and you carry the totals to Schedule D.

Do I have to report a sale if the basis wasn’t reported to the IRS? Yes. The sale is fully reportable even though the broker didn’t send basis. The IRS already has your proceeds, so omitting the sale invites a notice and possible penalties.

What happens if I leave the cost basis blank? The IRS treats your basis as zero. That means it taxes your entire sale price as gain, which can multiply your tax bill far beyond what you actually owe.

How do I report a sale with no basis and no records? Reconstruct a reasonable basis and document it. Contact your broker first, then use old statements, historical prices, or estate papers, and keep proof of how you calculated the figure.

What is a noncovered security? A security the broker isn’t required to report basis on. For 2025 it generally includes stock bought before 2011 and mutual-fund or reinvestment shares bought before 2012, per IRS rules.

How do I report inherited stock when basis wasn’t reported? Use the date-of-death value as your basis. Report it on Form 8949 Part II, Box E, enter “INHERITED” in column (b), and treat the gain as long-term regardless of holding time.

Why is my RSU basis reported as zero? Because brokers often omit the income already taxed on your W-2. Enter code B in column (f) and a negative adjustment in column (g) to add that income back and avoid double tax.

How do I report cryptocurrency sales for 2025? Use the new digital-asset boxes G–L on Form 8949. Short-term goes in G, H, or I; long-term in J, K, or L. Do not use the old boxes C or F for crypto.

Can I report directly on Schedule D without Form 8949? Only when basis was reported to the IRS with no adjustments. Per the IRS, basis-not-reported sales never qualify for that shortcut and must go on Form 8949 first.

What is a CP2000 notice and why did I get one? It’s an IRS notice that your reported income didn’t match its records. A blank or mismatched basis is a common cause. Respond within 30 days with your basis documentation.

Does my state tax these capital gains too? It depends on your state. Many states tax capital gains as ordinary income, while no-income-tax states like Florida and Texas don’t. Confirm with your state department of revenue.

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