1099B Question

[NatsFan11]

I received a 1099B for 2021, for sale of common stock, and with two items in Box 2 (one short-term covered transactions with cost basis and one long-term covered transactions with cost basis reported). But there is another item reported in Box 5 that has no cost basis reported in Box 1e, only the proceeds are reported in Box 1d.

These shares were awarded as Restricted Share Rights from my employer and vested over a number of years. When the shares vested, a large portion of the shares were withheld for taxes. 

I'm trying to fill out the fields in Turbo Tax, but don't know if this should be reported as long-term uncovered or long-term covered. I didn't actually purchase the shares, they were awarded upon vesting. Do I need to go back to the broker to get help with this? It seems like I have insufficient info on the 1099B.

[DianeW777]

The terms covered or uncovered simply refer to the information the broker has access to in regards to your stock basis.  Shares tracked by brokerage operations are called covered shares. Other shares are termed uncovered. You must continue keeping details on uncovered shares that are not tracked for you.

The cost basis for the Restricted Share Rights (RSRs) is the price the shares cost for normal market buyers the day they vested into your name.  This can be found on any number of web sights and most certainly from your financial office of your employer or Human Resources/Payroll. Once the shares vested your employer included an amount of income that was included in your W-2 for that year. This type of transaction requires a taxable income amount for you which in turn becomes your stock cost basis in your RSRs.

Check your W-2 income that was reported in the year your shares were vested.  This is the cost basis for the shares you received. Your employer can tell you the cost per share if there were different vesting dates. You may have to calculate that yourself once you have the numbers.

[NatsFan11]

This is very helpful, thank you! I can see from my account history what day the shares vested, so I will research the values as of that day. When I sold, I sold FIFO, so it seems like I could just calculate the cost basis by taking the oldest/first shares that vested, up to the number of shares that were ultimately sold, correct?

Do I need to show any of this calculation when I file, or just be able to produce it upon request?

[Mike9241]

don't submit any documentation since it's not required with filing. you wouldn't be able to efile because there's no way to attach non-standard documentation to an e-filed return. . if the IRS wants it they'll ask.

[NatsFan11]

Thank you!

[NatsFan11]

I think I have it all figured out - in my transaction history I can see the Date Issued, Original Shares, Transaction Price/Share, and Date Surrendered. I think I need to simply multiply the number of shares by the share price as reported on the date issued, correct? 

[GeorgeM777]

Yes, to determine your cost basis multiply the number of shares that were issued to you by the stock price on the day they were issued and the resulting number will be your total cost basis.  You can use the same method to calculate the total sale proceeds too.  That is, multiply the shares you sold by the stock's sale price.  If you paid commissions/fees when selling, add those commissions/fees to your cost basis.  You don't need to pay tax on commissions/fees, therefore add that amount, if any, to your cost basis so that your sales proceeds reflect the correct gain or loss.

Sometimes taxpayers will ask what price they should use when calculating cost basis.  For example, should they use the price at market open, or the price when the market closed, or should they use the average price on the day the shares vested.  That determination must be made by the taxpayer in consultation with their employer.  The employer's plan will probably include information about what price was used when the employer sold shares to cover tax withholding, and that is probably the price the employee/taxpayer should use when determining their cost basis.