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rahm1
Level 1

Missed reporting cost basis for RSU Sell to Cover on 2019 return

Hi, I had a few RSU shares vest in 2019. I only recently realized that despite the 1099-B showing a showing a cost basis of $0.00, I do have to report these on my tax return. Let me share an example:

 

Lets assume in 2019, 100 shares vested at a market value of $10 and I chose to sell-to-cover 30 shares at a price of $10 to cover my taxes due and 70 shares remained with me.

 

My 1099-B shows "Total Proceeds" of $300, corresponding to the shares I sold to cover my tax obligations, but it also shows a cost basis of $0.00. I am guessing the correct way to do this is to somehow indicate a cost basis of $300 in the 2019 tax return i.e. under Box 1d "Sale Proceeds" I should enter $300 and under Box 1e "Cost or other basis" I should also enter $300, otherwise when I sell the balance 70 remaining shares, it would look like I haven't paid any taxes on them. For eg. if the stock price rises to $15 and I decide to sell my remaining 70 shares, my correct taxable income should be "=70 x ($15 - $10)" and not "=70 x ($15 - $0)"; is this correct?

 

If it is correct that i have made a mistake in not reporting this my follow-up question is, now that i have already filed 2019 return, how do i correct this mistake? I am using Turbo Tax Premier 2021.

 

Thanks.

2 Replies
Critter-3
Level 15

Missed reporting cost basis for RSU Sell to Cover on 2019 return

All sales reported on a 1099-B from the broker must be reported even if the sale was also reported on the W-2 and if the 1099-B doesn't have the cost basis listed correctly then you must enter the correct amount yourself.  Usually these sales will show a loss in the amount of the broker's fee for the sale.

 

If this is on a 2019 return then the IRS will be sending you a CP2000 for the missing "income" soon so getting ahead of the action is wise  so  you will need to AMEND the 2019 return which cannot be done on the 2021 program. 

 

How to Amend

https://ttlc.intuit.com/community/amending/help/how-to-amend-change-or-correct-a-return-you-already-...

TomD8
Level 15

Missed reporting cost basis for RSU Sell to Cover on 2019 return

The per-share cost basis of the shares you received at vesting is the compensation created by the vesting divided by the gross number of shares received.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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