dmertz
Level 15

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NUA is not eligible for a step-up in basis because that amount is considered to be deferred income.  However, any appreciation of the shares after distribution does get stepped up.

 

These are should be uncovered shares, so the brokerage should not be reporting the basis to the IRS on the Form 1099-B when the shares are sold.  For your own and possibly your heir's purposes it would probably be helpful for the brokerage to have a correct record of the basis.  Even if the brokerage somehow reports incorrect basis, the basis can be corrected on the tax return, but that requires the one preparing the tax return to know the correct basis and not use the incorrect basis provided by the brokerage.

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