How do I enter a 1099-B in TurboTax, if it's associated with the sale of NUA shares with both STCG and LTCG tax treatment?

[blesna1]

I have a question about entering a 1099-B in TurboTax, for a company stock sale associated with a 401k NUA transfer.

Background
- I rolled 1000 shares into a brokerage account on 11/24/24
- The 401k cost basis for the shares was $28, so I paid ordinary income tax on the $28,000 gain
- The market value of the shares on 11/24/24 was $414, so the NUA spread is $386/share
- I sold 200 of those shares on 6/11/25 for $475/share

I was told by Fidelity if I sell shares at a gain within 1 year (before 11/24/25), the gain between $28 and $414 will be taxed as LTCG, and above $414 will be taxed as STCG. And after 1 year all sales will be taxed at LTCG.

So I assumed taxes on the $95,000 6/11/25 sale would tax $77,200 (200 * $386) as LTCG, and $12,200 (200 * $61) as STCG.

Question
How do I enter a tiered/split cost basis in TurboTax if the 1099-B is showing the entire $89,400 gain as STCG?

NOTE: I'm using TT Premier Desktop/Windows, NOT TT Online. The TT Community web app doesn't reflect this correctly.

[dmertz · Accepted solution]

I think it would work to enter a sale of 200 shares at $414/share with $28/share basis as LTCG and a sale of 200 shares at $475/share with $414/share basis as STCG.  At least that would give you the correct taxable result.  I'm not sure if there is a better way to do it.

[dmertz]

You should probably check out this thread.

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/nua-stock-sale-and-3-...

Something that I hadn't considered is that the NUA should be exempt from NIIT.

It looks to me that you might have to use forms mode of a desktop version of TurboTax to make an entry of $12,200 on the Form 8960 Worksheet line 5b Adjustment for gain or loss on dispositions.  This will put -$12,200 on line 5b of Form 8960.  (If your income is not high enough to subject you to NIIT such that your tax return does not include Form 8960, you don't need to do this.)

[blesna1]

Thanks @dmertz , appreciate it. 

I've heard similar from other research, to do 2 posts as you suggest.

[blesna1]

Thanks again, @dmertz .

I'm filing MFJ and my AGI will not exceed $250k, so I'm not sure I need to be concerned about NIIT, or doing the reverse entry in form 8960?

Also, I'm actually using TT Desktop/Windows, but for some reason the Community web app won't let me update my post to reflect it. It also appears that someone (or a bot) move my post to a different community and tagged it as TT Online, unfortunately.

[dmertz]

Correct.  With MAGI for the purpose of NIIT being below $250,000, your tax return won't have Form 8960.

[blesna1]

Hi @dmertz  - a quick follow up question...  Would these be the correct 2 entries for TT?

LTCG entry
Proceeds: $82,800 ($414*200, which doesn't match the 1099-B)
Cost: $5,600 ($28*200, which matches the 1099-B)

STCG entry
Proceeds: $95,000 ($475*200, which matches the 1099-B)
Cost: $82,800 ($414*200, which doesn't match the 1099-B)

This seems erroneous at first, since neither fully match the 1099-B. BUT, projecting it out it would yield the correct LTCG ($77,200) and STCG ($12,200) treatment, which would also sum to the correct total gain on the 1099-B ($89,400).

Also, since only the LTCG entry has the correct Cost, should I be checking the "The cost basis is incorrect or missing on my 1099‑B" on the STCG entry? I'm assuming "no", but thought I'd ask.

Thanks!

[dmertz]

I think that that entry makes the most sense.  You could instead break it apart by shares, 172.706935 LTCG and 27.293065 STCG, both at $475/share with $28/share of cost basis, but I think that that is less clear and would be harder to justify.  I think that the original way more clearly breaks it apart into LTCG on the NUA portion and STCG on the non-NUA portion.

[blesna1]

Great, thank you again, @dmertz.

Also, do you know if there is any place I can make a comment in my returns, indicating what I did? The IRS does also have the 1099-R from the year prior, which indicates that I rolled NUA shares over, if that matters. 

[dmertz]

In forms mode you can open a Blank Form where you can make entries, but I don't know if this gets included in an e-filing.  It does get included in the official forms for filing when you print.

I don't think that the IRS automated systems would detect any problem which ever way you reported it.  An explanation statement would only be reviewed if the tax return gets examined by a human, which in most cases only happens if the automated system kicks it out for review.