I received 1099R and 1099B for the same ESOP sale, it's exactly the same amount on both forms. When I entered both forms it charges me taxes twice. Is that correct?

[growlanser8]

i got the same problem . did u fix yours?

[macuser_22]

See TomYoung's answer below.

[growlanser8]

1099-B my cost or other basis is blank so u saying box 2 from 1099-R is my cost or other basis? Also i called my company and they didnt wanna give me the cost or other basis by phone only thru email so i have to wait now . why didnt they just put it on my 1099-B?

[TomYoung · Accepted solution]

I take it that you took your distribution "in kind" - stock - and that stock had some amount of NUA (Net Unrealized Appreciation).  You then immediately sold the stock.  If that's correct then:

Typically the 1099-R in this situation will have 3 boxes filled in: Box 1, Box 2a and Box 6 which is the difference between Box 1 and Box 2a.  You get taxed on the Box 2a amount and that's the basis of the stock.

Then you report the sale of the stock off the 1099-B.  The proceeds should be very close to the 1099-R Box 1 amount, the Box 2 amount is your basis and you have a gain more or less equal  to the NUA.  Be sure to indicate the sale is "long term".

So you're not double taxed.  You're taxed at ordinary rates on the "basis" portion, you're taxed on your LTCG for the NUA, and together those two numbers come back -"more or less" - to the 1099-R distribution.

Tom Young

[LeeM]

I would contact the issuer of that Form 1099-R and determine why it was issued. Usually a Form 1099-R is used to report 404(k) dividends from an Employee Stock Ownership Plan (ESOP).

The sale would normally be reported on your Form 1099-B. Simply enter your 1099-B to report the sale on your tax return.

However, I would determine why your received the Form 1099-R because the IRS will receive the same form and will be looking for it on your return.

[ivatan]

What you described in the beginning of your post sounds very similar to my situation and I desperately need help right now.

I took a total distribution of my ESOP account from my former employer and they issued me a stock certificate for the entire balance from my ESOP account in October 2021 which is 8909 shares. I then deposited the stock certificate to my TD Ameritrade  account and sold 6709 shares in November 3. The 1099-R I received from my former employer shows the same amount in box 1 and box 2a. There is an amount box 6 NUA that is close to the total proceeds of my sale of the 6709 but not the exactly equal. It is about $3k higher. The 1099-B I received from TD Ameritrade does not have a cost basis information. How do I enter these info to minimize my tax liability? Is the amount in the box 2a of my 1099-R really what should be taxed? I did not even sell all of the shares I received and now the remaining value is less than 50% of what was reported. What would the cost basis be in the 1099-B report? Shall I report this a short term or long term sale? I need help. Thank you!

[RobertB4444]

@ivatan  This is tricky but it's ok.  The amount being paid to you on your 1099-R is the cost basis of your stock trade.  It's going to be taxed as regular income.  Which is why it's on your 1099-R.  You need to take it and put it as the basis on your 1099-B so that you aren't taxed on the income twice.  The IRS will have copies of both of these forms and will understand why you have made this adjustment.  A long term sale occurs over a year after the purchase of the stock sold.  In your case because it is less than a year between purchase and sale you will enter short term.

[ivatan]

@TomYoung @RobertB4444 

Can you help me out? I received a single stock certificate from my ESOP distribution when I left my former employer.  I deposited the stock certificate in my TD Ameritrade account immediately afterwards and sold a number of shares. The remaining unsold shares are still in my TDA account.

My situation is like this (numbers for demonstration purposes only. not actual figures):

9000 shares issued. Share price at time of issuance = $10.00

Sold 7000 shares at $11/share a few days later.

2000 shares remain in my TDA account. Current market value = $5.00/share

1099-R data from former employer:

Box 1: $90,000

Box 2a: $90,000

Box 2b: Total distribution box is checked.

Box 6 NUA: $78,000

1099-B from TDA:

Box 1d (Proceeds):  $77,000

Cost basis: BLANK

My questions are:

1. In Turbo Tax Premier Online, can I simply enter $12,000 for Box 2a of 1099-R (Box 6 NUA - Box 1)?

2. What should I enter as my cost basis for the 7000 shares sold at $11/share? 

Thank you for your help.

[TomYoung]

@ivatan 

I dropped out of the TurboTax "SuperUsers" group some years ago when they changed the program from SuperUsers to "Champions" whereby we were required to promote TurboTax via social media and sign NDA's, but I still get emails when posts are made to my old answers.  In the main I never reply unless some "expert"  - @RobertB4444 in this case - gives really bad advice.

Let's start with your 1099-R where you say "The 1099-R I received from my former employer shows the same amount in box 1 and box 2a."  That strikes me as completely wrong so the first thing I'd do is go back to the employer and asks "what gives?"  Based on your made-up numbers it seems like box 2a should be $12,000 such that $90,000 - $12,000 = $78,000.  So the basis for ALL THE SHARES should be $12,000.

Next, the statement "long term sale occurs over a year after the purchase of the stock sold. In your case because it is less than a year between purchase and sale you will enter short term" just isn't the case.  The whole point of taking stock with NUA is that the NUA is LONG TERM by definition, even if you sell the stock the same day you acquired it.

TurboTax just doesn't have any sort of "guidance" when it comes to this situation, so you need to sorta fake things a bit to get it entered properly.

[ivatan]

Thank you, @TomYoung !

After I posted my inquiry to you yesterday, I found your other earlier posts to people in the same sittuation as I do and after getting a little bit of understanding on how the NUA works,  I reached out to my former employer and asked them why the amounts in Box1 and Box2a are the same when I haven't actually even sold the share they gave me. They realized their mistake, apologized and made the corrections to my 1099-R. Now Box2a shows the difference between Box 1 and Box 6 which is the actual amount they put into my ESOP account over the years.

I understand how to enter the proceeds of the sale of my ESOP shares now in the 1099-B section of my taxes.

Thank you very much for your posts here. It literally saved me from thousands of dollars from the tax man!

[DallasladyTN]

Okay, I'm doing the taxes for my brother and the same thing happened.  He received TWO 1099-B forms, each one showing how much stock was sold, when it was sold. and what the proceeds were with nothing under Cost or other basis.  He also received a 1099-R which shows a total in Gross (which is the total of both 1099-B forms combined), then a taxable amount in 2a and 6 has net unrealized appreciation $2.20, which is the difference between boxes 1 and 2a.  

So, do I only use the 1099-R form for his income tax, or if I enter all of them, is he going to be double-taxed?  Again, the 1099-B forms have NO amount listed in the cost or other basis box 6.  

[GeorgeM777]

Need some additional clarification regarding the 1099-Bs.  Do they both relate to the same account?  In other words, are the account numbers the same?  Also, if these 1099-Bs relate to non-retirement accounts, then those may also need to be entered into TurboTax.  If the cost basis has not been entered, then you will need to do some research to determine the cost basis.  It would be very helpful if you could determine how your brother acquired the shares that are listed on the 1099-B.  For example, were these restricted stock units your brother received from an employer?  If your brother purchased the shares outright, then cost basis ordinarily would be included on the 1099-B, and because it is not, this implies that your brother may have acquired the shares some other way such through an incentive stock option program offered by an employer.  

Yes, you need to enter your brother's 1099-R into TurboTax.  

@DallasladyTN

[DallasladyTN]

Hi, George:

1) Yes, the 1099-B's have the same account number.  

2) Yes, he received these from Publix as his employer (he did not purchase them outright).  

He stopped working in 2020 due to Covid and health-risk issues.  By November they determined he was no longer employed and in January and March of 2021 they sold his Sh Publix Common Stock.  The total of these two 1099-Bs correlate to the total on the 1099-R form.  

So, I know that 1099-R is considered retirement income.  I just wasn't sure how to handle the 1099-B forms in TurboTax in such a way that it wouldn't be double taxing him.  

Thank you for your help.  I look forward to your response.  

[DallasladyTN]

Oh, and as clarification, there is nothing on the 1099-B forms indicating any connection with retirement.  It just identifies the total shares and name of the common stock as noted above, and the dates sold.