topic Is TurboTax correctly calculating cost basis for RSUs? in Investors & landlords

Is TurboTax correctly calculating cost basis for RSUs?

kjoudrey — Thu, 06 Jun 2019 00:14:37 GMT

I have a question about RSU cost basis. I did see one question kinda like mine,and the answer was to delete the row with the issue, and enter it manually, but I want to see if my case is the same. In my case, shares were witheld for tax purposes. Over a year later I am selling the shares (all in that lot). My brokerage reports the cost basis based on how many shares I netted, at the price on the day they were vested. But TurboTax is calculating the cost basis based on the tax I paid.

Example: 20 shared distributed, 8 withheld to cover taxes. Assume $10 per share.

So, my brokerage account would say my cost basis is (20-8)*10= $120, but TurboTax is calculating my basis as 8*10= $80. So, which is correct? I am assuming the brokerage is correct, if that is true, how do I fix it in TurboTax?

Also, what is on my 1099-B is different than the supplemental stock plan detail, and TurboTax is asking about the supplemental details.

I can only guess that you are using the RSU step be step...

TomYoung — Thu, 06 Jun 2019 00:14:39 GMT

I can only guess that you are using the RSU step be step process and entering something incorrectly. I generally advise against using that method as 1) it's not necessary from an "income tax reporting" standpoint, unless the income from the vesting never showed up on your W-2, and 2) people commonly get confused in this interview and make mistakes.

So, if really know your correct basis per share - not what the broker is reporting on the 1099-B which probably is $0 - delete that trade and start over. (Just to make sure that you do know your basis per share, if 20 shares vested and the employer used $10 per share as the "fair market value", then $200 showed up on the W-2 as compensation arising from the vesting. And $200/20=$10 per share.)

Using the default TurboTax 1099-B entry form enter the 1099-B as it reads then click on the "I'll enter additional info on my own " blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x ($10)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.

Tom Young

(The RSU step by step interview will get you to the right answer if you enter the correct information.)

NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017

TomYoung, this is very helpful. Just to make sure I'm und...

jimeupturbo — Thu, 06 Jun 2019 00:14:40 GMT

TomYoung, this is very helpful. Just to make sure I'm understanding my E*Trade documentation correctly, they provide a Supplemental Information record that includes all sales of RSUs, ESPP and ISOs. For RSUs, there is a column for "Adjusted Cost Basis." My understanding is that this is the correct cost basis to report, and NOT the "Cost Basis" column amounts. Is this correct?

Well I'd guess "Adjusted Cost Basis" is the number to use...

TomYoung — Thu, 06 Jun 2019 00:14:41 GMT

Well I'd guess "Adjusted Cost Basis" is the number to use in calculating the gain or loss, but you'll have to make that determination yourself. To report the trade "by the books" you report the brokers number that's on the actual 1099-B, and then adjust it to the correct basis for calculating gain or loss as described above.

I entered the number of RSUs sold, the price when sold, a...

dhamma33- — Thu, 06 Jun 2019 00:14:43 GMT

I entered the number of RSUs sold, the price when sold, and the initial cost to buy them. However, TurboTax is listing the number of Shares X Price when sold as the cost basis, when that should be number of shares X price I paid for them. The program seems to have a serious error there. Now the valus is not only wrong, but doesn't match my 1099-B which correctly list the value of number of shares x price sold value as gross Proceeds. Is there a way to override and add the correct number for the cost basis on the tax form? The form appears locked and not editable.