2019 used NUA strategy to distribute 401(k) as "Lump Sum In-Kind Shares" into brokerage acct. 2020 sold a few shares; How is the cost basis calculated & the sale taxed?

[popsecretcollect]

The distribution met the "net unrealized appreciation" rules:

(1) The "triggering event" was "separation from service".  
(2) The 401(k) company stock shares were transferred "in-kind" (without liquidating it) to a taxable brokerage account).
(3) At distribution into the brokerage account (2019), I claimed the tax liability that I owed, which was the ordinary income tax due on the cost basis.

In 2020 I sold a few of the stocks. The number of shares sold was not greater than my initial cost basis (prior to the "in-kind" distribution).
 
I received a 1099-B for the sale, but the "cost basis" was left blank.

My questions:

1) How do I determine the cost basis on the shares that were sold? Are they calculated from the value of the shares at the date of distribution into the brokerage account?

2) Am I correct in thinking that "long-term" capital gains tax rates apply to the NUA assets as of the date of the distribution, regardless of the subsequent holding period?

3) How do I use the TurboTax program to calculate/claim/pay my tax liability for the sale?

Thanks in advance for your feedback...

[Spino]

1) The brokerage will typically not calculate the cost basis for shares that are not purchased through the brokerage. In this case, you transferred the shares in from your 401k.

a) At the time of the transfer you paid the tax. At this time you therefore calculated the value of the shares. If you transferred 100 shares and paid tax on $1000, your cost basis per share is $1000/100 shares=$10.

2) No, you only have long term if you have been the beneficial owner of the shares for over a year, as in 365 days. This is a factor in when you choose to sell the shares.

3) You will need to enter the date you initially received the shares, the cost basis you calculate, and report it as a sale where cost basis was not reported to you by the broker. (There are 4 categories, short term covered (e.g. reported basis), up to long term not covered (basis not reported.) TT has a drop down for this when you're reporting the sales. You report each of the 4 types of sales separately. It sounds like you are probably going to report as D: long term not covered.

[cuongvly]

If the Broker report basis cost on 1099-B was not your original basis cost. then what you do ,,,,,

[Spino]

It can be the case that the brokerage does not have the correct  basis. In that situation it is your responsibility to report the correct basis, explaining why you are correcting it, and be ready to provide the appropriate documentation if the IRS questions it after you file. This is true for many other tax situations as well. Just because someone else reports or is required to report does not mean you are no longer responsible for what you file, whether the difference is in your favor or not :-). At least that's how i understand it. It can't hurt to include an explanatory note in the return any time you are correcting (or disagreeing) with what someone else is reporting. Doing that is the sort of good practice a tax program can't do for you!

[cuongvly]

Fidelity re adjust basis cost as market price when NUA even , They just reported it.