taxdean
Yes, you've interpreted Step 1 correctly. No NIIT on the sale of the NUA shares.
Regarding the year end statements from the brokers:
We will have to see how the brokers report the sale on their 1099-B for 2025.
For shares I sold prior to selling the NUA shares, there was no indication on the 1099-B that they were related to a prior 1099-R.
My solution is:
NUA Shares:
- Report the sale of the NUA shares under Investment Income, Stocks using the basis and proceeds from the 1099-B.
- There is a box near the bottom titled "The cost basis is incorrect, etc.".
- Check that box, press Continue and enter the Actual Cost basis two screens later. I.e. From Box 2a on the 1099-R.
- On the Worksheet for Form 8960, enter the "Not subject to NIIT" amount as noted earlier.
Shares Subject To NIIT:
- Add a new sale(s) for those shares using the basis and proceeds as reported on the 1099-B.
- The NIIT does not start until your MAGI income exceeds $200k single or $250k married.
Regarding The Taxable Amount Of The NUA:
My error, you are correct. Thankyou for catching that.
The entire NUA amount from the 1099-R is taxable as LTCG. The entire amount is also Not subject to NIIT on the Worksheet for Form 8960.
I will go back and correct my prior postings.
Looking forward to any further feedback from you or others.
