How do I adjust my qualifying ESPP sale from my former employer where the stock was a REIT and I need to adjust cost basis to reflect non-dividend distributions?

[cibarite]

My former employer was a REIT and I received non-dividend distributions during the holding period.  I have these totals per share/stock lot, but also want to make sure that I should also back out the stock discount in the cost basis since I'll pay ordinary income on it.  

[RobertB4444]

Here is a great article on entering Employee Stock Purchase Plans into TurboTax.

@cibarite 

[cibarite]

How do I represent the non-dividend distributions that were issued for the shares I held?  

[GeorgeM777]

As the non-dividend distribution is a return of your capital, it is not taxable.  However, it reduces your cost basis in the REIT shares you purchased through your employer's ESPP program.  Because it reduces your cost basis, and assuming the adjusted cost basis is not reflected on your 1099-B, you need to make an adjustment to the cost basis such that the adjustment appears on Form 8949, column g.  Because it is an adjustment to cost basis, you will probably need to enter code B in column f as well.   TurboTax will populate your tax forms with all of these adjustments as you enter your information into the TurboTax application.  

Enter your REIT/ESPP information in the Investment Income (TurboTax CD/download) or the Investments and Savings (TurboTax online) section and select the sub-section Stocks, Mutual Funds, Bonds.  Depending upon which version of TurboTax you are using, the introductory screens will be different.  For example, in TurboTax online, you will see various introductory screens requesting information about the type of investment you need to report.  However, in both versions, you will see a screen that allows you to make an adjustment to basis, particularly if that basis has been reported incorrectly on your 1099-B.  For example, in TurboTax online, at the screen where you enter your information about your REIT sales, you can check the box indicating that your basis as reported on your 1099-B is incorrect, and then on the next screen, you can enter the appropriate adjustment.  In TurboTax CD/download, you can select the option of having TurboTax "walk you through everything" to ensure proper reporting, or if you do not need any guidance, you can select the option to enter all of the information on your own, including adjustments to basis.  

@cibarite