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SAR and RSU Cost Basis spreadsheet

Forum|Forum|6 years ago
March 15, 2020
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Hi. I am struggling to make sure I am entering the correct info in TTax for a number of SSAR and RSU transactions (including SellToCover, ExerSales, and WitholdToCover). I tried to put a spreadsheet together to make sure I was using the right data to get to Cost Basis. When I look at the results compared to what I have in a broker statement... it does not match. Before finding a local CPA, is anyone willing to review a gSheet and help me get the calculations right? I am not just trying to solve 2019. Trying learn and avoid a lot of struggles going forward, but just can't seem to understand this correctly.

Best answer by TomYoung

There really is no big mystery about the cost basis of stock acquired via SARs or RSUs. What makes the reporting of sales of shares acquired in this fashion somewhat difficult is that on the 1099-B itself brokers are only required to report your "out of pocket" costs for these stocks, which typically is $0. That basis is wrong and if you simply enter the 1099-B as it reads and don't adjust the cost basis you end up reporting the same income twice. (However, brokers are supposed to provide along with the 1099-B a "statement" of some sort that does provide the correct cost basis information.)

It's best to think about sales of these stock on a "per share" basis; that makes it easy to come up with the correct basis when reporting the sale of less than the entire grant, as in a sell to cover situation. The per share basis of these stocks is the same as the per share "fair market value" used by the employer to calculate the compensation associated with receiving the shares. That is, (GROSS number of shares received before "withhold" or "sale") x (per share FMV) = Compensation associated with that lot.

Presumably all the necessary taxes associated with the shares were included on the various "taxes" boxes of your W-2 and, generally, a "same day" sale of stock results in a small loss due to selling commissions and fees.

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TomYoungAnswer

Employee

There really is no big mystery about the cost basis of stock acquired via SARs or RSUs. What makes the reporting of sales of shares acquired in this fashion somewhat difficult is that on the 1099-B itself brokers are only required to report your "out of pocket" costs for these stocks, which typically is $0. That basis is wrong and if you simply enter the 1099-B as it reads and don't adjust the cost basis you end up reporting the same income twice. (However, brokers are supposed to provide along with the 1099-B a "statement" of some sort that does provide the correct cost basis information.)

It's best to think about sales of these stock on a "per share" basis; that makes it easy to come up with the correct basis when reporting the sale of less than the entire grant, as in a sell to cover situation. The per share basis of these stocks is the same as the per share "fair market value" used by the employer to calculate the compensation associated with receiving the shares. That is, (GROSS number of shares received before "withhold" or "sale") x (per share FMV) = Compensation associated with that lot.

Presumably all the necessary taxes associated with the shares were included on the various "taxes" boxes of your W-2 and, generally, a "same day" sale of stock results in a small loss due to selling commissions and fees.

S

singlemalt1Author

Thanks @TomYoung. I appreciate your response!

I am trying to get the cost basis right as that was not reported. To complicate things, I have multiple transactions of RSU's and SSAR's. It looks like only the SSAR's get reported on the 1099B.

For the SSAR's, I had two transactions. One was an ExerSale, and the other a SellToCover. Only the Sell To Cover has Income and Capital gains info. Since the W2 has all the RSU and SSAR income, I am having some trouble double checking my math for each "lot". In general I understand that for the Exersale, I am selling all shares, while in the STC, I am just concerned with the shares sold to cover taxes (so the per share basis helps me get there).

I will re-read your response and give it another shot! And... I think you have indicated in the past that for RSU/SSAR's in TurboTax, we should NOT use the interview process as it will confuse things? Unfortunate because I could use the guidance 🙂

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TomYoung

Employee

" And... I think you have indicated in the past that for RSU/SSAR's in TurboTax, we should NOT use the interview process as it will confuse things? "

There's no legitimate 'income tax return reporting requirement" to use those interviews. The interview should only be used if the compensation income wasn't included on the W-2, or if you haven't a clue as to what the basis for the sale is. But the interview simply asks you, essentially, what the stock closed at that day, and uses that number as a "close enough" estimate.

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Bleuspeed

Hi @singlemalt1 , were you able to get this sorted out? I was searching online for help with the same topic of how to report SSAR and RSU sales via TurboTax. Based on your previous posts, I think we may be working at the same company. Happy to review your spreadsheet and see if it jives with what I am planning to do for mine.