topic Re: Covered securities and supplemental forms in Get your taxes done using TurboTax

Covered securities and supplemental forms

jyeh74 — Thu, 13 Feb 2025 01:15:53 GMT

On 1099B, the covered securities will already have adjusted cost basis reported. How come the supplemental form has a different adjusted cost basis?

How does the figures change if it was already reported initially with the 1099B?

Re: Covered securities and supplemental forms

DavidD66 — Thu, 13 Feb 2025 04:46:13 GMT

I'm not sure what you mean by "supplemental form". Forms 1099-B don't always have the correct cost basis. This happens for employer stock sales such as Restricted Stock, Non Qualified Stock Options, Employee Stock Purchase Plans. The 1099-B sometimes is accompanied by a supplemental schedule that shows the correct cost basis. In cases where the stock basis is incorrect on the 1099-B, the cost basis must be adjusted after the amount on the Form 1099-B is entered. If you don't understand what is reported on the supplemental form, I suggest you contact your broker and inquire about it.

Re: Covered securities and supplemental forms

jyeh74 — Thu, 13 Feb 2025 04:49:31 GMT

What I meant by “supplemental form” is the supplemental schedule that corrects the cost basis. My question is how could the cost basis be incorrect to begin with?

Re: Covered securities and supplemental forms

ThomasM125 — Thu, 13 Feb 2025 18:19:01 GMT

Normally when the cost basis is incorrect, you are dealing with stock acquired through your company, often through an employee stock purchase plan (ESPP). In those instances, a portion of the gain on sale of the stock is reported on the W-2 form as wages. Usually the cost basis reported on the Form 1099-B will list the stock cost when acquired which does not include the discount the employee received, which is reported as wages on the W-2 form. In that instance, you need to add the discount to the cost basis on the Form 1099-B to arrive at the correct cost basis to deduct from the sale proceeds. Otherwise, you total income reported from the stock sale will be overstated.

Re: Covered securities and supplemental forms

jyeh74 — Thu, 13 Feb 2025 18:24:34 GMT

How are RSUs incorrectly stated the cost basis?