I'm trying to enter 1099-B sales info for an ESOP, but when asked 'What type of investment did you sell?', there is no option listed for ESOP. What should I select?

[jaems1964]

I'm trying to figure this problem out too. Is anyone reading these posts?

[BrittanyS]

To enter ESOP for a 1099-B, follow these steps in TurboTax online:

1. In TurboTax, search for 1099-b and select the link
2. Answer Yes: Did you sell any of these investments in 2022? screen
3. Select Continue on the Get ready to be impressed screen
4. Either import your info from your bank or institution or select Enter a different way on the Let's import your tax info screen if you don't want to upload
   • If you chose not to upload, select Stocks, Bonds, Mutual Funds on the OK, let's; let's start with one investment type screen and select Continue
5. On the "Tell us about your 1099-B sales screen", answer the questions, and answer Yes under Do these sales include any employee stock?
6. Select Continue
7. Add your details from your 1099-B and select Continue

For more information on employee stock purchase plans, see the link below:

Employee Stock Purchase Plan

@jaems1964 

[jaems1964]

Okay... Let me try to clarify the problem a little better. 

In the last step, you instruct me to enter the information from my 1099-B.
The problem comes at the second drop-down menu, "What type of investment did you sell?"
There is no option for "ESOP".
There is: "ESPP", "NQSO", "ISO", "RSU", "RS", "Stock (Non-Employee)", "Cryptocurrency", "Mutual Fund, Index Fund, or EFT", "Bond", and the last choice is "Options". 

The closest choice is ESPP. However, an ESOP is not an ESPP and an ESPP is not an ESOP.

So... that is the issue and potential problem. If I enter this as an ESPP it is technically incorrect. 

I'd really appreciate it if anyone could clarify or provide more information and details on this issue.

Thanks.

[GeorgeM777]

You are correct in that Employee Stock Ownership Plans are not the same as Employee Stock Purchase Plans.  ESOPs are generally tax advantaged retirement plans that allow employees to acquire shares in their company based on years of service, and perhaps other factors too.   Employees usually don't pay taxes on contributions, but there may be tax implications when amounts from such plans are distributed.  

Did you take a distribution from your ESOP?  If so, and without providing any personally identifiable information, could you tell us how much and whether you contributed any of your own funds to the ESOP.  Any additional information you could provide about the characteristics of your ESOP would help us better understand your tax situation. 

@jaems1964 

[jaems1964]

Yes, I did take a distribution. 66K with 13K taken out of that in taxes, roughly.

I was issued both a 1099-R and a 1099-B.

The 1099-R shows reporting of the distribution and the 1099-B shows both amounts.

The 1099-R is titled *COMPANY NAME* and "ESOP Allocation; "Distributions from Pension, Annuities, Retirement/Profit Sharing Plans, IRAs, etc."

The 1099-B is titled "Proceeds from Broker and Barter Exchange Transactions"
The funds were not rolled over into any other retirement account. So I am expecting a penalty. I would like to avoid a fine for not filing it correctly.

This is a reply (exact quote) from our trustee via my company point of contact about the issue.

"In 2022, the company exercised the put option. So the 1099-R showed the stock distribution from the trust and the 1099-B showed the put of the shares back to the company. His accountant will be able to help him file his tax return correctly and both need to be included with his personal tax return."

I'd prefer not to have to hire an accountant for the information I need to file my own taxes. This really shouldn't be so complicated. I appreciate the help regardless if I end up having to do that.

[MarilynG1]

You will enter the 1099-R, and Box 2a will be the Taxable Amount.  When you enter your 1099-B, you will need to adjust the Cost Basis to the amount in Box 2a.

You don't have to indicate 'Employee Stock', just check the box to adjust the cost basis. 

You will end up with the 2a amount being taxed as Ordinary Income from the 1099-R, and taxed as Capital Gain/Loss from the 1099-B entry.

Click this link for detailed info on Reporting 1099-R and 1099-B. 

[jaems1964]

Based on all the replies I think I have it all entered correctly.
But I am still leery about the selection choice in "What type of investment did you sell?" and,
I don't see any penalty appearing for early distribution that I was expecting.

[MarilynG1]

The Early Distribution Penalty would be associated with your 1099-R Distribution.  Depending on the Code in Box 7, this may not apply to you.  If it did, you would be advised in the screens following your 1099-R entry. 

What screen are you looking at for 'What type of investment did you sell?'.  In the 1099-B entry area, you enter your own description, which is usually something like '100 shs XYZ Company' which should be on Box 1a of your 1099-B.  Choose 'Stocks, Bonds, Mutual Funds..' in TurboTax Online and No to 'Employee Stock'.  The trickiest part for you is adjusting the Cost Basis on your 1099-B. 

Here's more info on How to Enter 1099-B. 

@jaems1964 

[jaems1964]

Your screens look very different than mine.
But I will attach some screen captures for you to see. 

The 1099-B Drop Down menu choices I have.
drop down menu Type of Investment ...

The 1099-B Box 1a Description Box filled out

1099-B Box 1a Description

The 1099-R entries with code in box 7,
and unchecked boxes matching my report.

1099-R with code for box 7 and IRA... Not checked matching my report.

[MarilynG1]

Yes, with Code 1 in Box 7 of your 1099-R you should have follow-up screens about Early Withdrawal following your 1099-R entry, and later after 'disaster' question, about a Penalty Exception (unless you are over 59-1/2).  Screens below is what I'm seeing in TurboTax Online. 

For your 1099-B, pick 'Stock (non-employee)', but since you will have neither a Gain or Loss, this doesn't affect your tax return. 

@jaems1964 

[jaems1964]

I've gone over and over these follow-up questions and replies.
I'm pretty convinced I have the 1099-R entered correctly and all the following questions we still correct.

However, the 1099-B is still not right. The distribution of these funds was from an ESOP early and partial distribution option we get after reaching 55 1/2 years old called Diversification. I am still employed with the company. So "Stock (non-employee)" can't be correct.

To illustrate my point if I switch the selection to "Stock (non-employee)" a new drop-down menu appears directly below it with a new question. "How did you receive this investment?" See the image below. None of these apply since it is an ESOP that we do not purchase shares. We earn shares with vested years of service and the calculated value of our account is based on annual valuations of the company and the number of shares that have been allocated to employees.  We do not purchase anything.

In the Learn More window for that drop-down menu at the bottom, there is "Other method" with an explanation. But it is not part of the drop-down list.  So should I not select anything from the list?

[jaems1964]

By leaving that second drop-down menu option blank and continuing on I was prompted with more options that specified an ESOP distribution. I was then prompted to re-enter my Cost Basis, which was still correct but I entered again.

But I still did not see any penalty roll into my total.  I'm not feeling confident.

[MarilynG1]

Select 'I purchased it' in the second dropdown.

It is odd that you are not seeing any penalty info.

If you go to the left-side menu, click on Tax Tools > Tools, then choose 'View Tax Summary' from the pop-up menu.

Back at the left-side menu, choose 'Preview my 1040'.

Scroll down to Part II, 'Other Taxes', Line 8 and see if an amount is showing there. 

[jaems1964]

Thanks, to everyone for helping me with this.

I changed the drop-down to "purchased" and looked at line 8 of Part II. There is in fact an amount there; almost 5k actually. 

I think I was expecting to owe on the bottom line.  But I guess it is possible that without this ESOP transaction and another similar one, I would be getting a decent size refund. 

So at this point should assume it's all entered correctly and can move on?