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dhamma33-
New Member

Miscalculating cost basis

I have RSU sales.  Turbotox is calculating the cost basis as the number of shares X sale price. This appears incorrect and the cost basis should be number of shares X what the shares cost me. The problem is TT's number does not match my 1099-B which correctly calculates this same value of number shares X sale price as the gross proceeds, not cost basis.  If this is an error, how can I override the incorrect TT calculation and enter the correct information on my forms that match the 1099-B?  

1 Reply
TomYoung
Level 13

Miscalculating cost basis

"I have RSU sales.  Turbotox is calculating the cost basis as the number of shares X sale price. This appears incorrect and the cost basis should be number of shares X what the shares cost me."

I'm sorry, but you are wrong here.  When an RSU vests compensation income is created.  The calculation is:

      (GROSS number of shares in grant) x (per share "fair market value used by employer to calculate compensation)

Accordingly, your basis is not "what the shares cost you", (typically $0 for an RSU), but that same per share "fair market value" figure used by your employer.

Think about this: the vesting caused your employer to report taxable income in an amount that's the difference between the fair market value of the stock on the date of vesting and whatever you paid out of pocket to get that stock.  If you don't use that per share fair market value figure when you report your sale you're reporting your income twice: once as "compensation" on the W-2 and then again as "gain" when you record the sale.

TurboTax has got it right.

Tom Young


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