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I'm trying to validate what my cost basis should be for ESPP stocks I sold last year. My1099-B and activity report are telling me 2 different things via Morgan Stanley.

 
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DavidD66
Expert Alumni

I'm trying to validate what my cost basis should be for ESPP stocks I sold last year. My1099-B and activity report are telling me 2 different things via Morgan Stanley.

For RSUs, Forms 1099-B are almost always incorrect.  The supplemental information you have (activity report) probably has the correct information.  The Form 1099-B usually shows a zero cost basis.  That's because the basis for RSUs is not required to be reported to the IRS, so they don't add it to the 1099-B.  Your correct cost basis for your RSU shares is the value of the shares on the day the RSUs vested or were awarded.  That amount was treated as income, just as if it had been a cash bonus.  It was included in your W-2 box 1.  In it is already being taxed as income, you need use the per share value on the date your received them as your cost basis.  

 

When you enter your Form 1099-R, I recommend that you do not import your 1099-B, instead type it in yourself.  Also, if the information is on your activity report, do not indicate that it was Company Stock.  You don't need to go through the interview to determine what your cost basis is.  Enter what is on the 1099-B for the cost basis, and then enter the correct cost as and adjustment to the cost and indicate the reason is the 1099-B is wrong.

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