You scroll through your 1099-B past the short-term section, past the long-term section, and find a third heading you've never seen before: "Undetermined Term Transactions for Noncovered Tax Lots." Underneath it are sales with a blank acquisition date, no cost basis, and no indication of whether they're short-term or long-term. TurboTax then asks you to pick one, and you have no idea which is correct.
The undetermined term section isn't an error. It's your broker telling you, precisely, that it doesn't know when you acquired those shares — and that the holding period determination is now your job. This guide covers why it happens, how to establish the right answer, the two exceptions where the holding period isn't what you'd think, and exactly which Form 8949 box these transactions belong in.
What "Undetermined Term" Actually Means
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Every capital transaction is either short-term (held one year or less) or long-term (held more than one year), and the difference is substantial — long-term gains get preferential rates, short-term gains are taxed as ordinary income.
To classify a sale, your broker needs the acquisition date. When it doesn't have one, it can't classify, so it puts the transaction in a third bucket labeled "undetermined term" and reports only what it does know: the proceeds and the sale date.
This is not the same as a missing cost basis, though the two almost always travel together. Undetermined term transactions are, by definition, noncovered — if the broker had been required to track basis, it would have had the acquisition date too. So expect both fields blank.
The transaction is fully reportable and fully taxable. The broker reported the proceeds to the IRS. Leaving it off your return produces exactly the mismatch that generates a CP2000 notice.
Why Your Broker Doesn't Know
Five situations account for nearly all undetermined term transactions.
1. The shares transferred in from another broker. By far the most common cause. When you move an account, the delivering broker is supposed to pass along basis and acquisition dates for covered lots. Transfers frequently break: the position arrives as shares with no history attached, especially for older lots, in-kind transfers, or transfers from a firm that was acquired. Brokerage migrations produce these in volume — the TD Ameritrade to Schwab migration generated a great many.
2. The shares predate cost basis reporting. Broker basis reporting phased in starting in 2011 for stocks, 2012 for mutual funds and DRIPs, and later for options and debt instruments. Anything acquired before the applicable date is permanently noncovered — see cost basis reporting rules for covered vs noncovered securities.
3. You inherited or were gifted the shares. The broker knows when the shares landed in your account but not what the tax rules say your holding period is, which is a different question entirely. More on this below.
4. Shares came from a corporate action. Spinoffs, mergers, stock dividends, and demutualizations create new positions whose holding period generally traces back to the original security — something the broker often can't reconstruct. See stock spinoff and merger cost basis.
5. Physical certificates or direct registration. Shares deposited from paper certificates, or transferred from a transfer agent like Computershare, arrive without history.
How to Establish the Holding Period
Work through these in order and stop at the first one that answers the question.
Check your own records. Old trade confirmations, year-end statements, the account history at the prior broker. Most brokers keep at least seven years of statements accessible online, and closed accounts usually remain viewable.
Ask the previous broker. If the shares transferred in, the delivering firm has the acquisition date even if it failed to transmit it. A phone call often resolves it in minutes, and this is the single highest-yield step.
Check the transfer agent. For directly registered shares or DRIP positions, the transfer agent has complete purchase records including every reinvested dividend — each of which is its own tax lot with its own DRIP cost basis.
Reconstruct from evidence. Bank records showing the purchase, an old brokerage statement showing the position already held, employer records for equity compensation, estate documents for inherited shares. You need enough to establish that the acquisition happened before a particular date, not necessarily the exact day.
When you genuinely can't determine it. If you can establish the shares were held for more than a year — for instance, a statement from two years prior showing the position — that supports long-term treatment even without an exact purchase date. Use a reasonable date you can defend and document your reasoning.
If you can't establish anything at all, short-term is the conservative treatment: it produces the higher tax and is the position the IRS is least likely to challenge. But treat that as a last resort. The rate difference is large, and one call to the old broker usually beats paying it.
The Two Exceptions That Override Everything
These trip up more people than any other part of the topic, because in both cases the correct holding period has nothing to do with how long the shares actually sat in your account.
Inherited shares are always long-term. Regardless of how long the decedent held them, regardless of how long you held them, and even if you sold the day after the estate transferred them. Inherited property receives long-term treatment automatically, along with a stepped-up basis equal to fair market value at the date of death. If your undetermined term transactions are inherited shares, the answer is long-term and you're done. See inherited stock cost basis and the step-up.
Gifted shares carry over the donor's holding period. You add the donor's holding period to your own. Stock your parent bought in 2005 and gave you last month is long-term when you sell it. The basis rules for gifts are more complicated than the holding period rules — see gifted stock cost basis on Form 8949.
Because brokers can't know either of these things, inherited and gifted shares land in the undetermined term section almost by default.
Where They Go on Form 8949
Once you've determined the holding period, the transaction is reported like any other noncovered sale.
| Your determination | Form 8949 section | Box |
|---|---|---|
| Short-term, reported on 1099-B, basis not reported | Part I | Box B |
| Long-term, reported on 1099-B, basis not reported | Part II | Box E |
| Not reported on any 1099-B | Part I or II | Box C or Box F |
Undetermined term transactions appear on a 1099-B, so they're Box B or Box E, never C or F. Our guides to Box A vs B vs C and Box D vs E vs F cover the full matrix.
Filling in the row:
- Description — the security name and share count, as on the 1099-B
- Date acquired — the date you determined. If you have a defensible range but not an exact day, "Various" is acceptable for a group of lots; for inherited shares, enter "INHERITED"
- Date sold — from the 1099-B
- Proceeds — from the 1099-B, and this must match exactly
- Cost basis — the figure you established
- Adjustment code — usually none, since you're supplying basis the broker never reported rather than correcting a reported figure
These cannot use the Schedule D shortcut. Lines 1a and 8a are only for transactions with basis reported to the IRS and no adjustments. Undetermined term transactions fail the first test, so they must be itemized on Form 8949 — see our Schedule D instructions.
Handling It in Tax Software
TurboTax asks how long you owned the security and won't proceed without an answer. It also asks whether the basis is correct — select that basis was not reported, and enter your figure. If TurboTax shows the sale as needing review, our guide to 1099-B entries that won't clear review covers the usual causes.
TaxAct, H&R Block, and FreeTaxUSA all require an explicit holding period selection and a basis figure. None will let you leave it blank.
If you have many of them — a transferred account can generate hundreds — entering them one at a time is impractical. Extract the full list from the PDF, determine the holding period for each group, and import as a file. See handling a large 1099-B.
FAQ
What does "undetermined term" mean on a 1099-B?
That the broker doesn't know your acquisition date, so it can't classify the sale as short-term or long-term. You determine the holding period and report it yourself.
Is undetermined term the same as noncovered?
Effectively yes — undetermined term transactions are always noncovered, meaning the broker reported proceeds but not cost basis to the IRS. Not all noncovered transactions are undetermined term, though; a broker can know the acquisition date without being required to report basis.
What do I enter if I can't find the acquisition date?
Use the earliest date you can support with documentation. If you can show the position existed more than a year before the sale, long-term treatment is defensible. With no evidence at all, short-term is the conservative choice.
Are inherited shares short-term or long-term?
Always long-term, regardless of how long anyone held them. Inherited property gets automatic long-term treatment plus a basis step-up to date-of-death value.
Which Form 8949 box do undetermined term transactions go in?
Box B if you determine short-term, Box E if long-term. They came from a 1099-B, so Box C and Box F don't apply.
Can I just report it as short-term to be safe?
You can, and it's the conservative position. But it usually costs real money — the rate difference between short and long-term can exceed 15 percentage points. Try the old broker first.
Why did my whole transferred account come through as undetermined term?
The delivering broker didn't transmit cost basis and acquisition dates with the transfer. It's common and fixable — request the basis detail from the firm you left.
Do I have to report undetermined term transactions?
Yes. The proceeds were reported to the IRS, and omitting them creates a matching discrepancy.
Bottom Line
An undetermined term section on your 1099-B means your broker is missing one specific fact: when you bought the shares. Everything else about the transaction is ordinary.
Get the acquisition date from the previous broker or the transfer agent before you settle for a guess — that call is usually the difference between long-term and short-term rates on the whole position. And check the two exceptions first, because inherited shares are always long-term and gifted shares inherit the donor's clock, regardless of what your account history shows.
Transferred account full of undetermined term lots with no basis? Try it on your 1099-B — upload the PDF and get every transaction extracted into a spreadsheet you can work through lot by lot, then export as CSV or TXF once you've filled in the dates and basis.
By 1099-B Converter Editorial Team
The 1099-B Converter editorial team writes guides on 1099-B tax filing, broker import issues, and Form 8949 / Schedule D reporting.