I found that although on my 1099-B Box 4 Fed Income tax withheld is empty, taxes were indeed reported to the IRS. Look back at your payslips that month or the month after you sold and should see one that only reported the taxes.
Technically, there is no cost basis since we didn't contribute to the investment and the stock was awarded as a long term incentive (LTI) which is not usually reported to the IRS when during bonus time unlike a cash bonus. The sale of the LTI is only reported the following year or during the tax year of the sale. I hope that made sense.
I don't think of it as being taxed twice. My assumption is that we could just report the Proceed amount in 1d. and let the system determine if we had paid enough in taxes. Assuming that LTIs had to vest over a period of years and only the taxes have been reported to the IRS (and not the cost basis) the sale category selected should be "long term noncovered" (long term sales with cost basis not reported to the IRS).
I'm not a tax professional, but this is what makes the most sense to me.
