How do dealers aggregate multiple sales to the same customer to determine 1099‑B reporting?
Executive summary
Brokers and other reporting entities generally must report proceeds from each reportable sale to the IRS, but the rules allow limited aggregation and special handling depending on the asset type, whether the security is "covered," and whether adjustments (wash sales, market discount, lot identification) apply; software and filing practices also permit summarizing many transactions on attachments when permitted by IRS instructions and program rules [1] [2] [3]. For certain commodities—most notably precious metals—revenue procedures specifically permit aggregation of multiple sales within a 24‑hour window into a single reported sale, while for typical securities brokers generally produce per‑transaction records though taxpayers and preparers may use summary entries when certain conditions are met [4] [5] [6].
1. What the IRS expects: per‑transaction reporting for most covered securities
The baseline rule is transactional: for covered securities brokers are required to report acquisition dates, cost basis and other lot‑level details on Form 1099‑B for each sale, meaning that each sale is treated as its own reportable event unless a specific exception applies [2] [5]. The IRS continues to insist that proceeds shown on Forms 1099‑B be reported on Form 8949/Schedule D so the agency can match taxpayer filings to broker reports [7]. That matching purpose explains why brokers ordinarily generate separate line items for distinct trades and why guidance emphasizes lot‑level reporting when basis is known [8].
2. When aggregation is explicitly allowed: special asset rules and safe harbors
There are narrow, asset‑specific aggregation rules: revenue procedures and guidance for bullion and precious metals permit brokers to aggregate multiple sales by the same customer within a 24‑hour period and treat them as a single sale for reporting, provided the broker has no reason to suspect the transactions were structured to avoid reporting [4]. Similarly, the IRS allows noncovered securities to be reported on a separate Form 1099‑B with limited boxes left blank (box 5 treatment), which can reduce lot‑level detail when the broker chooses that route [2] [5]. These are exceptions to the general rule, not replacements for it [5].
3. Practical aggregation for taxpayers and preparers: summaries and software handling
Tax preparers and tax software commonly permit taxpayers to aggregate multiple broker trades when they meet commonality tests—usually that the transactions are all short‑term (or all long‑term), lack adjustments like wash‑sale or accrued market discount entries, and share basis reporting status—so that a single summary line can be entered on the return with an attached detailed statement if required [9] [6] [10]. Major tax packages and service providers document workflows that let preparers bundle thousands of trades into summarized totals for Schedule D/Form 8949, but they also warn that individual reporting is required when adjustments or lot‑specific basis differences exist [3] [9].
4. Lot identification, FIFO and the broker’s role in aggregation decisions
When taxpayers provide specific lot identification in a timely manner, brokers will report basis accordingly; absent adequate lot IDs, the broker is directed to report proceeds for shares with unknown purchase dates first and then apply FIFO to the remaining shares—procedures that affect whether and how multiple sales can be aggregated on 1099‑B [8]. Brokers therefore both produce the underlying transaction detail and exercise judgment about how to present aggregated vs. separate entries based on customer instructions, asset coverage status, and IRS rules [8] [5].
5. Tensions, incentives and what to watch for in practice
There is an incentive for brokers and taxpayers to summarize many small, unadjusted transactions for practical filing ease, and tax software supports that workflow, but the IRS’s matching and penalty framework pushes towards accurate per‑transaction reporting when required; errors or mismatches can generate notices or penalties [8] [7]. Stakeholders advocating for simplicity (software firms, high‑volume brokers) may emphasize aggregation options, while IRS guidance and revenue procedures preserve per‑transaction transparency and include anti‑avoidance language for aggregation in assets like bullion [3] [4].