How do I enter stock shares received free from my company (income on W-2) and the 1099-B is category X and doesn't give a cost basis or type of gain or loss?

[wesley_peffer]

1099-B: check box "X" and 5 (noncovered security). Stock purchase paid by the company & was income on my W-2; no basis on 1099-B and nothing in box 2.  Turbo tax won't let me proceed without a basis.  What do I do?

[jtax]

Category X and noncovered security is telling you that the broker (company) is not reporting the basis or the holding period (long term > 1 yr or short term < 1 yr) to the IRS. You have to figure that out yourself and tell TT.

If you didn't pay for the stock yourself and you were immediately vested in the stock (i.e. if you left the company you wouldn't lose it), then your basis would be the the fair-market value (FMV) for the stock when it was given to you, which as you say should be included in a W2. So enter that as your basis.

Let's say the company gave you 10 shares of $5 stock on 6/1/17. You then sold the stock at $6 a share on 10/1/17. You have ordinary income (W2) of 10 x $5 = $50.  That is your basis in the 10 shares. Your capital gain is then 10 x $6 = $60 - basis = $60 - $50 = $10. In this case it is a short-term gain because it wasn't owned for a year.