topic Net Unrealized Appreciation in Get your taxes done using TurboTax

Net Unrealized Appreciation

Carole2017 — Sat, 07 Dec 2024 18:49:15 GMT

Attempting to use NUA. However, I do not wish to sell any stock for cost basis - I like the receipt of dividends. How does one pay tax on cost basis? If payment of taxes on cost basis is made to IRS, will the IRS track the no sale of stock? How long?

Re: Net Unrealized Appreciation

M-MTax — Sat, 07 Dec 2024 21:20:25 GMT

Think you may have read something and misunderstood the concept. Read this for starters.

Re: Net Unrealized Appreciation

dmertz — Sun, 08 Dec 2024 01:02:45 GMT

The Form 1099-R that you receive for the distribution will exclude from the taxable amount in box 2a the NUA and the NUA will appear in box 6. The result is that, with regard to these shares, only the cost basis of these shares will be taxable.

It's your responsibility to track the cost basis of these shares because the brokerage will treat these distributed shares as noncovered shares. When you eventually sell these shares, you'll likely need to provide the cost basis of these shares yourself. The IRS does not track anything regarding cost basis of property.