Reporting SSAR which were cash settled

[SumeetA]

Hi, 

I'm unclear how to treat sale of SSAR on my investment income. My employer had awarded me SSAR back in 2015 that had vested in 2019. I exercised the SSARs and realized the appreciation through immediate conversion and sale. 

Illustrating an example:

Had 100 SSAR priced at $190

Exercised them for $200 to have a gross income of $10/ SSAR and gross earnings of $1,000.  Furthermore, I know that my Swiss company's brokerage deducted taxes of ~$350 during sales so remaining $650 got deposited to my account.

In above instance, 1099-B shows that I sold "5 shares" @ $200 each for "gross proceeds" of $1,000. Also, my W-2 shows that amount of $1,000 as "SSAR" in section 14 (The "5 shares" were computed as $1,000/$200 per stock).

Question: How do I report this sale in TurboTax such that I don't pay taxes again. It is not a RSU, its not ISO or NQSO or ESPP. Based on some other posts I saw, I thought I should select RSU but I got stuck since I could figure out how to adjust for taxes paid.

[ThomasM125]

You can report the sale as a normal stock sale.

It sounds like the income was reported on your W-2 form and again on your form 1099-B. In this situation, you need to report both forms as they are listed, but with the 1099-B you will see this screen when you report it in TurboTax:

Highlighted in blue at the bottom, you will see "I'll enter additional information on my own." Click on that option to enable you to report the correct cost basis of the shares sold, which should include the income reported on your W-2 form.

What happened to the taxes paid, are they listed as taxes withheld on your W-2 form or 1099-B?

[SumeetA]

Thanks for quick reply. The taxes paid are not reported on 1099-B. It only shows the "gross proceeds" amount in 1d.

I have to assume that taxes paid were included in my W2 since the brokerage trade confirmation shows that (attaching snapshot - CHF currency since Swiss company). Based on instructions on TurboTax's "additional info" screen I should probably not report these tax amounts since they are not part of 1099-B, correct? Instead I should put the SSAR dollar amount as reported in W2 income (which is almost same amount as the "gross proceeds" in 1099-B) and report that in "corrected cost basis" section? That would essentially net out almost a 0 gain/ loss (ignoring the trade commission costs of the 34.44 CHF you see in attachment - which I could perhaps put in "sales expense" section and make it a perfect 0 gain/ loss).

Also, this was just an illustration since I have about 20 such trades. Guessing I will have to manually calculate the fractional cost basis for each transaction and report them 1 at a time.

[SumeetA]

Thanks for quick reply. The taxes paid are not reported on 1099-B. It only shows the "gross proceeds" amount in 1d.

I have to assume that taxes paid were included in my W2 since the brokerage trade confirmation shows that (attaching snapshot - CHF currency since Swiss company). Based on instructions on TurboTax's "additional info" screen I should probably not report these tax amounts since they are not part of 1099-B, correct? Instead I should put the SSAR dollar amount as reported in W2 income (which is almost same amount as the "gross proceeds" in 1099-B) and report that in "corrected cost basis" section? That would essentially net out almost a 0 gain/ loss (ignoring the trade commission costs of the 34.44 CHF you see in attachment - which I could perhaps put in "sales expense" section and make it a perfect 0 gain/ loss).

Also, this was just an illustration since I have about 20 such trades. Guessing I will have to manually calculate the fractional cost basis for each transaction and report them 1 at a time.

[DaveF1006]

You have the option of summarizing the trades also instead of entering one by one.

[abdullah_k]

I have the same issue.  However, the screenshot you included is what I recognized from last year.  This year, I don't see these options.  Please advise.

[roballenjr79]

Were you able to figure out how to do this?

I am having the same issue as you.

[rimix]

I found that although on my 1099-B Box 4 Fed Income tax withheld is empty, taxes were indeed reported to the IRS. Look back at your payslips that month or the month after you sold and should see one that only reported the taxes.

Technically, there is no cost basis since we didn't contribute to the investment and the stock was awarded as a long term incentive (LTI) which is not usually reported to the IRS when during bonus time unlike a cash bonus.  The sale of the LTI is only reported the following year or during the tax year of the sale.  I hope that made sense.

I don't think of it as being taxed twice. My assumption is that we could just report the Proceed amount in 1d. and let the system determine if we had paid enough in taxes.  Assuming that LTIs had to vest over a period of years and only the taxes have been reported to the IRS (and not the cost basis) the sale category selected should be "long term noncovered" (long term sales with cost basis not reported to the IRS).

I'm not a tax professional, but this is what makes the most sense to me.

[junzhu98]

I studied pay slips and found that the Proceed amount is included in taxable income in W2 form.  

Federal income withheld is also included in taxes withheld amount shown on W2 form.

So 1099-B form is a little bit misleading.

I think the right way to fix this is to report cost basis as the same value as the Proceed, so the net is zero.

[BrittanyS]

You will determine the cost basis by determining the "fair market value" your employer used to come up with the compensation reported on the W-2.  For example, if you had 45 shares sold, you will calculate your cost basis as FMV per share x 45 shares.  The cost basis is then subtracted from the sale to determine loss or gain.  

@junzhu98