Need help with 1099-B after company acquisition

Forum|Forum|5 months ago
February 10, 2026
1 reply
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I'm struggling to understand how to correctly add all of the information associated with incentive stock options that I had. Here is the full context of the scenario:

I purchased all of my vested incentive stock options, but in 2 separate transactions. Based on the acquisition of my company, the majority turned out to be long term, and a small portion was short term (purchased less than 12 months before acquisition). The short term was paid out via special payroll payment, so not applicable here.

I received my 1099-B from the payer escrow account. In the summary section, there is basically only a total proceeds amount. Everything else is either (see details) or blank. They do not have a cost basis for me or date acquired on here related to my purchase price, but I do have 3921 forms from my employer with that.

The 1099-B states "Transactions for which basis is not reported to the IRS and for which Short or Long Term determination is unknown (to broker)". Description of property is "Redemption of Securities" and they are listed as a noncovered security.

So now for my questions because I want to make sure I get this right:

1. I'm assuming, since I know for sure that this is representative of long term holdings only, that I need to choose the option for "Long-term basis not reported to IRS (noncovered)?

2. Total cost or other basis (sum of all Box 1e) - this box is blank on my 1099-B, so I'm assuming that I put $0 here and then check the box for "I need to adjust my total cost basis"?

3. When I put my adjustment amount into the next box, the results only seem to make sense in the overall gains listed if I put in a negative number to represent what I paid. Is this correct? It feels odd, but if I put a positive number for amount paid, my gains show up as the sum of this number and my Total Proceeds, so positive can't be right.

4. I'm totally unsure what adjustment codes to pick. B (cost basis incorrect on form) seems applicable since it's actually blank on the form, but I'm unsure if any of the others should be added as well.

5. Lastly, am I actually going to have to mail a copy of this 1099-B to the IRS after filing? It reads like I do need to do that, but feels clunky to have to mail something when everything else is happening digitally.

Thanks so much to anyone able to help. Hopefully I spelled it all out clearly, if not in a bit of excess.

Best answer by ThomasM125

You are correct to identify the securities as long-term basis not reported to the IRS (non-covered). You do enter $0 for the cost basis since that is what is on your Form 1099-B, and then check the box indicating it needs adjusting.

For the cost of the shares, you should enter what you paid for them if you sold incentive stock options that were held for more than two years from the grant date and one year from the date you acquired them. Otherwise, you would add the discount you received on the purchase to what you paid for them and enter that for the cost basis.

Code "B" is fine as the cost basis on the Form 1099-B is incorrect.

It is recommended that you mail the Form 1099-B with your return since you adjusted the cost basis. If you don't do that the IRS may request a copy of it later on.

I'm not sure why your gain equals your cost basis plus the proceeds. It may be that you entered information from the Form 3921 incorrectly. You don't need to enter that form if you know the cost basis and there is not any discount associated with the stock sales reported on your W-2 form. In that case, you can choose the option to enter your adjusted cost basis without TurboTax assisting you in calculating it, so you won't be asked to enter the Form 3921.

If the stock sales are long-term, meaning you sold the stock more that two years from the grant date and one year from the date of acquisition, there would be no ordinary income associated with an incentive stock option sale. So, your gain would be the proceeds minus your cost, and that would be the only income you have to deal with. Otherwise, you would have ordinary income listed as wages on the W-2 form equal to the discount that you would have to factor in to your cost of the shares to arrive at the cost basis reported when you enter the Form 1099-B.

T

ThomasM125Answer

Level 15

You are correct to identify the securities as long-term basis not reported to the IRS (non-covered). You do enter $0 for the cost basis since that is what is on your Form 1099-B, and then check the box indicating it needs adjusting.

For the cost of the shares, you should enter what you paid for them if you sold incentive stock options that were held for more than two years from the grant date and one year from the date you acquired them. Otherwise, you would add the discount you received on the purchase to what you paid for them and enter that for the cost basis.

Code "B" is fine as the cost basis on the Form 1099-B is incorrect.

It is recommended that you mail the Form 1099-B with your return since you adjusted the cost basis. If you don't do that the IRS may request a copy of it later on.

I'm not sure why your gain equals your cost basis plus the proceeds. It may be that you entered information from the Form 3921 incorrectly. You don't need to enter that form if you know the cost basis and there is not any discount associated with the stock sales reported on your W-2 form. In that case, you can choose the option to enter your adjusted cost basis without TurboTax assisting you in calculating it, so you won't be asked to enter the Form 3921.

If the stock sales are long-term, meaning you sold the stock more that two years from the grant date and one year from the date of acquisition, there would be no ordinary income associated with an incentive stock option sale. So, your gain would be the proceeds minus your cost, and that would be the only income you have to deal with. Otherwise, you would have ordinary income listed as wages on the W-2 form equal to the discount that you would have to factor in to your cost of the shares to arrive at the cost basis reported when you enter the Form 1099-B.

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