If this was a simultaneous distribution from the ESOP and sale of the stock then this should be easy to enter into TurboTax.
You need to refer to your 1099-R. Typically the 1099-R will have 3
boxes filled in. Box 1 reports a gross distribution, Box 2a reports the
taxable amount and Box 6 reports the difference. That difference is the "Net Unrealized Appreciation" (NUA) of the stock.
For purposes of reporting the sale of the stock your basis is the Box 2a amount and that should be the amount that gets taxed as income when you enter the 1099-R. The 1099-B should report proceeds which is the same as or close to the Box 1 amount on the 1099-R. The resulting gain should be the same as or close to the Box 6 amount.
So your total taxable income - taxable distribution from ESOP plus LTCG from the 1099-B entry - should be the same as or close to the Box1 gross distribution on the 1099-R, hence no "double taxation" issue.
Make sure that you report the stock sale as "Long term" to get the tax benefit of the lower long term capital gains rates.
Tom Young
You need to explain you situation more completely. My instinct is that you either transferred the stock into an after-tax brokerage account and sold the stock or sold the stock back to the company as part of the distribution. Is that your case? Or was there some "rollover" going on here?
Dear Tom, as far as I know, we sold the stock back to the company as part of the distribution. (Sorry, we're kind of amateur about this issue) ... Another thing, as far as I remember, TT asks about a ESPP stock, not a ESOP stock, am I wrong? ... Best regards !
If this was a simultaneous distribution from the ESOP and sale of the stock then this should be easy to enter into TurboTax.
You need to refer to your 1099-R. Typically the 1099-R will have 3
boxes filled in. Box 1 reports a gross distribution, Box 2a reports the
taxable amount and Box 6 reports the difference. That difference is the "Net Unrealized Appreciation" (NUA) of the stock.
For purposes of reporting the sale of the stock your basis is the Box 2a amount and that should be the amount that gets taxed as income when you enter the 1099-R. The 1099-B should report proceeds which is the same as or close to the Box 1 amount on the 1099-R. The resulting gain should be the same as or close to the Box 6 amount.
So your total taxable income - taxable distribution from ESOP plus LTCG from the 1099-B entry - should be the same as or close to the Box1 gross distribution on the 1099-R, hence no "double taxation" issue.
Make sure that you report the stock sale as "Long term" to get the tax benefit of the lower long term capital gains rates.
Tom Young
What do you do about the box 7 10% penalty? Is there supposed to be that penalty for the sale of stock?
If your 1099-R reports an early distribution, you will be assessed a 10% penalty. There is an early withdrawal penalty for retirement disbursements made before age 59 1/2. There can be some exceptions to the penalty, but it depends on the type of account from which the distribution was made.
I sold the “ earned “ company stock and received a 1099R and 1099B for the same transaction. They were done in the period that the CARES ACT allotted for special circumstances. My 1099B doesn’t have a date acquired. And Box 6 on the 1099R is empty. I earned it over a period of 4.5 years and it is extremely similar in situation to the questing being asked that started this thread. I do not want to be taxed twice. A live consultant told me I have a chance I’d being taxed twice with the information I had readily available to him. I have ALOT of info I can provide but I do now want to write a novel :). Can anyone help me out?
Given that you know it was over a course of 4 1/2 years, then it is clearly a long term transaction, therefore, when you report it you will just need to let the system know that it is a LT G/<L> and report the basis and sale accordingly.
I too am having the same issue. Without the 1099R & B entered, my income is $8k. When I add in the $17k distribution from the ESOP from both the 1099R and the 1099B, my income jumps to $42k. The distribution is definitely long term and I've made sure to check the box on the 1099B entry indicated "long term noncovered", as per the 1099B.
I get the difference between the 1099R reporting the distribution and the 1099B reporting the gain on the sale, but I only recieved the 17k one time. Why would it show up twice in my taxable income on TT?
A little bit more info... On the 1099B, only the Box 1d, proceeds, has an amount of 17k. Shouldn't there also be a "basis" amount in box 1e?
@VerJ The Form 1099-R appear to be reporting an in-kind distribution of the ESOP shares. With an in-kind distribution, the cost basis of the shares becomes the gross distribution amount shown in box 1 of the Form 1099-R.
Click this link for more info on Cost Basis of ESOP Shares.
I am over 64. I did receive a 1099R and 1099B for the same ESOP sale in 2020. The 1099R Box 1 reports a gross distribution, Box 2a reports the taxable amount and Box 6 was empty. The 1099B gross proceeds/Box 1 was 14% lower than what was on the 1099R. I sold it before the fall of the market (1/23/2020) but it took over a month (2/28/2020) during the pandemic when the sale went through. When I input both the 1099R and B , I get taxed for both.
There was a suggestion to skip the 1099R and use what was on 1099B but the IRS most likely received both.
Any suggestions?
Similar to others on here who have still not heard an answer to this question....
I received a 1099-B after cashing out $791 of employee owned stock last year. I also received a 1099-R with the exact same amount on it so when I enter all boxes from both I am being taxed on $1582 (doubling the $791)
I have nothing in box 6 on the 1099R. The amount on my 1099B is $790.73 and the amount on my 1099R is $790.73 so Turbo Tax is adding these together under income, looks like double taxing to me
@SophDo when you enter the sales proceeds from Form 1099-B, report the cost basis of the shares as the taxable amount ($790.73) as shown on your 1099-R. You'll have a net gain of $0, and you will not be double-taxed.