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mpeter2010
Level 1

I received a free stock, but the cost basis says 2.42 - should I enter that value or enter 0? The free stock is also listed in 1099-misc

 
4 Replies
KathrynG3
Employee Tax Expert

I received a free stock, but the cost basis says 2.42 - should I enter that value or enter 0? The free stock is also listed in 1099-misc

Do not enter 0. The basis in the free stock is equal to the income you received when given the stock. You may need to adjust the cost basis as listed. The sale proceeds would be the amount reported on Form 1099-MISC.

 

Assuming you received the free stock and subsequently sold it, then you must report Form 1099-MISC and the sale of the stock.

 

To not be taxed twice on this taxable event, follow these steps to report Form 1099-MISC as received, "back out" the income as a negative amount since it is reported in full on Schedule D, and report the sale of the stock on Schedule D.

 

Step 1 and 2:

  1. From the left menu, select Federal.
  2. At Wages & Income, scroll all the way down to Less Common Income and click Show More.
  3. Select the last listed option for Miscellaneous Income 1099-A, 1099-C, click Start
  4. Next, select the last listed option Other Reportable Income.
  5. Did you receive any other taxable income, click Yes.
  6. Other Taxable Income: Enter your description including the name of your broker, such as Robinhood, and Form 1099-MISC as received and the amount and click Continue and Done.
    1. Disregard the comment "Do not enter income from Form 1099-MISC here" because this is meant to guide taxpayers reporting typical 1099-MISC income. Your case is less common and this is how you can report it in TurboTax. 
  7. Select Add Another Income Item.
    1. For description, enter Form 1099-MISC reported on Schedule D.
    2. For the amount, enter the same number on Form 1099-MISC as a negative amount. For example, if the first entry was for 10, then the offset would be -10.

This method will satisfy the reporting of Form 1099-MISC. You will not need to fill out a 1099-MISC in the Other Common Income section, as well.

 

Step 3:

  1. Click Income & Expenses, the first tab across the top, on the left inside TurboTax.
  2. Scroll down to Investment income and Show More.
  3. At Stocks, Mutual Funds, Bonds, Other (1099-B) or Cryptocurrency, wherever these details were uploaded or entered, select Revisit.
  4. If this transaction is not added, select Add more sales. Otherwise, select Edit/Review to adjust the Proceeds from Sales and Cost basis from sales for this transaction.

[Edited 02/26/2021 | 6:13 PM PST]

@mpeter2010 

mpeter2010
Level 1

I received a free stock, but the cost basis says 2.42 - should I enter that value or enter 0? The free stock is also listed in 1099-misc

If I report it under other income, should I still fill out a 1099-MISC form as well? @KathrynG3 

JohnB5677
Expert Alumni

I received a free stock, but the cost basis says 2.42 - should I enter that value or enter 0? The free stock is also listed in 1099-misc

I have a couple of questions and comments:

  • Did you receive this stock in 2020, and did you receive any tax forms with it. 
    • Was it possibly included on your W-2? 
      • If so you will not have to post anything for income.  It was included.
      • This will be your basis when you sell the stock.
    • Did you get a 1099-MISC, or other tax form.
      • This is taxable income
      • It will become the Basis when you sell the stock
  • Did you sell the stock in 2020
    • Did you get a 1099-B reporting the sale?
    • If you did this is how to post it.
  1. Open (continue) your return if it isn't already open.
  2. Income & Expenses
  3. Scroll to Stocks, Mutual Funds, Bonds, Other
  4. Answer Yes to Did you sell stocks, mutual funds, bonds, or other investments in 2020?
    • If you see Here's the info we have for these investment sales, select Add More Sales.
  5. Answer Yes to Did you get a 1099-B or brokerage statement for these sales?
  6. At Let's get your tax info, choose how you want to enter your 1099-B (import or type it in yourself).
  7. Follow the instructions.
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mpeter2010
Level 1

I received a free stock, but the cost basis says 2.42 - should I enter that value or enter 0? The free stock is also listed in 1099-misc

@JohnB5677  It was a free stock that I received in 2020 from Webull (brokerage company). I received a 1099-B as well as a 1099-MISC. The proceeds are included on both the 1099B and 1099MISC, but the cost basis is only on the 1099-B. Per the first reply, I entered information the info from the 1099 MISC under less common income-miscellaneous (1099A, 1099C) as they instructed. I am not sure if I also need to fill out a 1099 MISC form as well. 

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