Question

How to determine cost basis 1099-B for ESOP that was converted to stock

Forum|Forum|4 years ago
March 27, 2022
1 reply
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In Feb 2020, I did a rollover and converted my ESOP to regular stock and paid taxes based on the original cost basis. In Aug 2021, I sold all the shares of this stock but my 1099-B did not show any cost basis with the noncovered box checked. How do I calculate the cost basis?

Feb 2020 brokerage documentation says:

Value of shares received - gross distribution: X

Unrealized gains on shares received: X2

2020 Taxable Income: X3 = X - X2

Is my cost basis for the stock sale in 2021 one of the following:

1) $0

2) # shares times the price of the stock on 2/18/20

3) something else?

Thanks!!

G

GeorgeM777

Yes, your cost basis seems to be the number 2 option in your post. The basis would be the value on the date in February 2020 when you effected the conversion of your ESOP to the company's stock. In other words, whatever the value of the shares you received were on the day you received them, use that value as your basis. If it was publicly traded shares you received, then determining the value of the stock you received in February 2020, should be searchable using common search tools such as Yahoo Finance.

The non-covered box on your 1099-B means that your cost basis was not reported to the IRS. Thus, you will have to include this transaction on Form 8949.

@mattman22

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