Entering 1099-B for RSU sell to cover trades. In "Tell us about your RSU sale", it says only enter the portion of shares I sold, but I didn't sell any, so what do I put?

[Anonymous]

I had some RSUs vest and my company sold a portion of the lot to cover taxes. I didn't sell any of the remaining lot. I received a 1099-B for the sell to cover transactions and am trying to enter them. In the "Tell us about your RSU sale" section, it says "Make sure you only enter the portion of shares you sold" which I figured would be 0 since the entire transaction is for paying taxes. The box requires a number greater than 0, so I just emptied the box and continued. The final RSU value TurboTax calculated matched my W2 so I thought I was fine, but on the final federal tax return validation, it complains about the empty "Number of shares sold" box. What do I need to put for this?

[TomYoung · Accepted solution]

"I had some RSUs vest and my company sold a portion of the lot to cover taxes."

The more correct way of stating that is "my company sold a portion of the lot for me to cover my portion of taxes." The second the RSUs vested you owned all the stock in the grant.  Nobody but you could sell those stocks.  If you'd wanted to you could have reached into your pocket and handed the cash "for taxes" to the company and ended up with all the stock in the  grant instead of just a portion of the grant.  You got a 1099-B for your sale so you need to report your sale.

When you report your sale be sure to use the correct basis, which is not the $0 reported by the broker on the 1099-B.  Your per share basis is the same as the per share "fair market value" used by your employer to calculate the compensation created by the vesting.

Compensation = (GROSS number of share in grant) x (per share "fair market value" selected by the employer)

There's no real "Income Tax Return Reporting" need to use the RSU guided interview. 

[ad91]

Tom - Thank you for your posts on this topic, I've seen many! Wanted to confirm when inputting the cost basis for a sell to cover trade is it $ x total shares vested to you OR $ x net shares vested to you? 

With the latter being the shares you get into your custody after the broker has withheld some for covering withholding. 

Thanks!  

[Critter-3]

The 1099-B entries will show the sales price - (the broker fee + basis of stock purchases) = loss in the amount of the broker's fee.

[TomD8]

@ad91 --

The per-share cost basis of your RSU's is the compensation created by the vesting (which is reported on your W-2) divided by the gross number of shares received in that lot (including the shares sold for taxes).