Help with "Non Covered Security" on 1099-B

Forum|Forum|2 years ago
April 8, 2024
2 replies
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I received a 1099-B for a RSU (restricted stock units) from my employer. Box 5 "Noncovered Security" is checked. When I look this up, it says that means it is not reported to the IRS.

What does this mean in regards to if or how I file this 1099-B? I see nowhere to check this box was filing. Does this mean I should not file the 1099-B? I am getting so confused by this particular 1099-B and cannot get a straight answer.

Not A Product Question

DavidD66

You definitely need to report the transactions on the 1099-B. "Noncovered Security" means the cost basis was not reported to the IRS. The reason the cost basis is not reported to the IRS is because it is probably wrong, if there is one on your 1099-B. RSUs are really pretty simple. When they vest, the value on the date of vesting becomes ordinary income. This ordinary income should be included in Box 1of your W-2. Because you are taxed on that amount, that is also your cost basis. When you enter your RSU transaction you should enter the value that was included in Box 1 of your W-2. If you did not sell all of your shares/units upon vesting you will have to do a little math and determine the cost per share. If your employer did not include the value of the RSUs in box 1 of your W-2, you will have to add it t your tax return as additional compensation income.

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jtornga

David, you say the cost basis for a RSU transaction should be the value that was included in Box 1 of your W-2.

That would be the gross amount of the RSU. Shouldn't the cost basis be the proceeds or net amount after tax?

Mike9241

there are two types of non-covered securities. One where neither cost nor tax basis is reported to the IRS and the other where proceeds but not cost is reported. the first type would be categoty/class C or F. the second would be category/class B or E. unsure? ask the issuer.

B & C are for short-term and E & F are for long-term

in any event that 1099-B was sent to the IRS so you need to report it on your tax return

johnstearns611

The brokerage firm sent me both the proceeds for the non-covered security transaction and the cost basis. But the cost basis does not appear in TurboTax. Do I have to enter it manually? Or is there some way to make sure that information, that is, the cost basis is included?

Thanks!

John

Mike9241

What do you mean sent? If you imported the 1099-B, usually the proceeds and cost basis transfer to Turbotax even if the broker does not send the cost basis to the IRS. These are types b,c,e,f,x