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Properly reporting RSU vesting and sale w/1099-B

Forum|Forum|7 years ago
June 3, 2019
2 replies
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Up for inquiry is the following events affecting my RSU's (triggered by a merger).  I'd like to report them properly on 1099-B and anywhere else they need to be.  I did not pay for the shares.  Note: I've read some of the other help docs but did not see this exact scenario.

01/1/16 - 10 shares fully vest. Share value each is $10, resulting in $100 total compensation income.  For each RSU, received cash/share in new stock.
01/1/16 - 4 shares sold for tax.  Witholdings handled by company payroll.
02/1/16 - 6 remaining shares sold.  Handled by broker.

W2 - Taxes and the total compensation income of $100 are included. (Box 1, Box 14 - Other)

1099-B form displays: Short Term – Noncovered Securities* (Consider Box 5 (Noncovered Security) as being checked and Box 3 (Basis Reported to IRS) as not being checked for this section.  These transactions should be reported on Form 8949 Part I with Box B checked.)

(Box 1a) Description     : ACME, INC. I81U812
(No Box) Quantity        : 6
(Box 1b) Date Acquired   : 1/1/16
(Box 1c) Date Sold       : 2/1/16
(Box 1d) Gross Proceeds  : $60
(Box 1e) Cost Basis      : $60
(Box 1g) Wash sale loss  : blank
(Box 7)  Loss Not Allowed: blank
(Box 4)  Fed income tax  : blank

Questions:

1) For Box 1e - should the Cost Basis be the total compensation income reported on W-2 of $100?
2) Anything else I need to manipulate to ensure this is correctly entered?  I realize I probably will need to not use the import function and enter manually.

thank you!

TurboTax Premier Online

Best answer by TomYoung

"1) For Box 1e - should the Cost Basis be the total compensation income reported on W-2 of $100?"

No.

"2) Anything else I need to manipulate to ensure this is correctly entered?"

No.

Tom Young

T

TomYoungAnswer

Employee

"1) For Box 1e - should the Cost Basis be the total compensation income reported on W-2 of $100?"

No.

"2) Anything else I need to manipulate to ensure this is correctly entered?"

No.

Tom Young

L

Lady-TaxpayerAuthor

Thanks!

T

TomYoung

Employee

@ kalebral

"Thanks for your help. My issue is that my income from the sale of the RSU's after shares have been sold for tax purposes is being reported twice, once in my W2 and again in my 1099-B."

That's because you are reporting the WRONG BASIS. The correct per-share basis to use is the same per-share "fair market value" figure your employer used to calculate the compensation income reported on the W-2. Take that compensation income and divide it by the GROSS number of shares in the grant. That's your per-share basis. Brokers only need report your "out of pocket" cost for acquiring the shares which is $0 in your case. So if you simply enter the 1099-B as it reads then you do report income twice: once as compensation on the W-2 and then again as an overstatement of capital gain on the 1099-B

Enter the 1099-B as it reads on the default 1099-B entry form but then click on the "I'll enter additional info on my own" blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

Tom Young

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017.