Form 8949 Code E: Selling Expenses and Option Premiums

Updated October 17, 2026. Quick answer: Code E goes in column (f) of Form 8949 when there are selling expenses, digital asset transaction costs or option premiums that your Form 1099-B, Form 1099-DA or Form 1099-S does not already reflect. You enter the proceeds and basis exactly as shown, then put the cost or premium in column (g), as a negative number for amounts you paid and a positive number for an option premium you received.

IRS worksheets read line by line: Pub 523 Worksheet 2 and Pub 523 Worksheet 3.

When code E applies

The code E row in the column (f) table reads “You received a Form 1099-B, Form 1099-DA, or Form 1099-S (or substitute statement) for a transaction and there are selling expenses, option premiums, or digital asset transaction costs that aren’t reflected on the form or statement by an adjustment to either the proceeds or basis shown”. The key phrase is that the statement does not already include them. Where the broker already netted them into box 1d or box 1e, no code E is needed. Those boxes are covered on Form 1099-B boxes 1d and 1e.

What to enter in columns (d), (e) and (g)

The instructions lay out the entries: “Enter in column (d) the proceeds shown on the form or statement you received.” “Enter in column (e) any cost or other basis shown on Form 1099-B, Form 1099-DA, or Form 1099-S (or substitute statement).”

Column (g) then carries the extra cost or premium: “In column (g), enter as a negative number (in parentheses) selling expenses, digital asset transaction costs, and option premiums that you paid (and that aren’t reflected on the form or statement you received) and enter as a positive number any option premium that you received (and that isn’t reflected on the form or statement you received).” The instructions add a note on treatment: “Selling expenses resulting from transactions reported on Form 1099-B or Form 1099-S may have differing treatment than digital asset transaction costs reported on Form 1099-DA.”

Selling expenses in Publication 550 and the Schedule D instructions

Publication 550 says the same for stock sales: “Include in column (g) any selling expenses or option premiums not reflected in box 1d or box 1e of Form 1099-B.” “If you include a selling expense in column (g), enter “E” in column (f).”

Publication 550 gives examples of what counts as a sale expense: “On Form 8949, include in column (g) any expense of sale, such as broker’s fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d).” “If you include an expense of sale in column (g), enter “E” in column (f).”

Option premiums

The Schedule D instructions cover options that are not section 1256 contracts: “Report on Form 8949 gain or loss from the closing or expiration of an option that isn’t a section 1256 contract but is a capital asset in your hands.”

For a call option you sold, the instructions say “If a call option you sold after 2013 was exercised, the option premium you received will be reflected in the proceeds shown in box 1d of Form 1099-B, box 1f of Form 1099-DA (or substitute statement) you received.” For an older sale, “If you sold the call option before 2014, the option premium you received may not be reflected on Form 1099-B or Form 1099-DA.” “If it isn’t, enter the premium as a positive number in column (g) of Form 8949.” “Enter “E” in column (f).”

A labelled illustration of column (h)

This is an illustration, not an IRS example. Suppose your Form 1099-B shows proceeds of $5,000 in box 1d and basis of $3,000 in box 1e, and you paid selling costs of $200 that the form does not reflect. You enter $5,000 in column (d), $3,000 in column (e), E in column (f) and ($200) in column (g). Computing column (h): column (d) minus column (e) is $2,000, and $2,000 minus $200 is $1,800 for column (h).

That follows the instructions for column (h): “First, subtract the cost or other basis in column (e) from the proceeds (sales price) in column (d). Then take into account any adjustments in column (g).” For several codes on one row, “If more than one code applies, enter all the codes that apply in alphabetical order” with no space or comma. For a code B row that also has selling costs, see Form 8949 code B.

Where it goes next

Row by row, the column (h) amounts roll into the part totals. The instructions say “Include on your Schedule D the totals from all your Parts I and II.” See Schedule D, Form 8949 instructions and Form 8949 boxes A to L for which box to check.

Edition and line numbers

This page reads the 2025 Form 8949 and its 2025 instructions, along with the 2025 Schedule D instructions and Publication 550 for 2025 returns where cited, the current files irs.gov served on 2026-10-17, for the tax year 2025 return filed in 2026. Check the tax year printed on the form you are filling in and use the column letters and codes on that year’s form, because a different year’s form can letter its columns or word its codes differently.

Common mistakes

• Subtracting selling costs from proceeds in column (d). The instructions say to “Enter in column (d) the proceeds shown on the form or statement you received.” The cost goes in column (g).
• Entering a selling cost you paid as a positive number. The instructions say to enter it “as a negative number (in parentheses)”, while an option premium you received is entered as a positive number.
• Using code E when the broker already reflected the cost. Code E applies only to costs “that aren’t reflected on the form or statement you received”.

Related: Form 1099-B boxes 1d and 1e, Form 1099-DA box 1f, Form 8949 instructions, and Schedule D (Form 1040).

Sources

• Instructions for Form 8949 (2025): https://www.irs.gov/pub/irs-pdf/i8949.pdf
• Publication 550, Investment Income and Expenses (for 2025 returns): https://www.irs.gov/pub/irs-pdf/p550.pdf
• Instructions for Schedule D (Form 1040) (2025): https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.