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How to report RSU stocks that were vested in 2016 but sold on 2017? The taxes were paid via shares and reported on 2016 W2.

 
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How to report RSU stocks that were vested in 2016 but sold on 2017? The taxes were paid via shares and reported on 2016 W2.

You report them as sales of "plain-vanilla" stocks, stocks that are absolutely no different in any way, shape or form from a stock that you bought through your broker. The taxes on your 2016 W-2 are associated with the compensation income you received when the stocks vested.  Those taxes have nothing to do with any later sale of the stock. 

When you report the sale in 2017 be sure to use the correct basis for the stock.

When you sell stock acquired via an employer stock incentive program your basis for the sale is the sum of:

    Any amount you paid to receive the stock, which might be $0, (your case), plus
    Compensation income created either by the acquisition or sale of the stock

If the sale is "covered" - broker reports basis to IRS - then since 2014 brokers are only required to report the "purchase price" element of the sale.  The basis reported omits the "compensation" element of the sale and therefore the "compensation" amount gets reported twice if you enter the 1099-B as it reads: once via the W-2 and then again as an overstatement of gain on the sale of the stock.

Clearly the "fix" here is to add back the compensation element to the basis of the stock being sold.  Of course if the sale is not for ALL of the stock received under an employer stock incentive plan award, you then you need to convert the compensation element to a "per-share" figure which you use in reporting the sale.

If the 1099-B is reporting the basis to the IRS and is not using the correct basis then enter the 1099-B as it reads on the default 1099-B entry form but then click on the "I'll enter additional info on my own " blue button.  On the next page enter the correct basis in the "Corrected cost basis" box.  The correct basis is (number of shares sold) x (correct per share basis, which included the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

Tom Young

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR.  THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017.


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How to report RSU stocks that were vested in 2016 but sold on 2017? The taxes were paid via shares and reported on 2016 W2.

You report them as sales of "plain-vanilla" stocks, stocks that are absolutely no different in any way, shape or form from a stock that you bought through your broker. The taxes on your 2016 W-2 are associated with the compensation income you received when the stocks vested.  Those taxes have nothing to do with any later sale of the stock. 

When you report the sale in 2017 be sure to use the correct basis for the stock.

When you sell stock acquired via an employer stock incentive program your basis for the sale is the sum of:

    Any amount you paid to receive the stock, which might be $0, (your case), plus
    Compensation income created either by the acquisition or sale of the stock

If the sale is "covered" - broker reports basis to IRS - then since 2014 brokers are only required to report the "purchase price" element of the sale.  The basis reported omits the "compensation" element of the sale and therefore the "compensation" amount gets reported twice if you enter the 1099-B as it reads: once via the W-2 and then again as an overstatement of gain on the sale of the stock.

Clearly the "fix" here is to add back the compensation element to the basis of the stock being sold.  Of course if the sale is not for ALL of the stock received under an employer stock incentive plan award, you then you need to convert the compensation element to a "per-share" figure which you use in reporting the sale.

If the 1099-B is reporting the basis to the IRS and is not using the correct basis then enter the 1099-B as it reads on the default 1099-B entry form but then click on the "I'll enter additional info on my own " blue button.  On the next page enter the correct basis in the "Corrected cost basis" box.  The correct basis is (number of shares sold) x (correct per share basis, which included the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

Tom Young

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR.  THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017.


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