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Level 1

Question

How do I record Non-Covered Securities on my 1099B?

Forum|Forum|7 years ago
May 31, 2019
7 replies
1 view

I received a 1099B for stock I sold in an ESPP. The majority of the sale is shown as "covered securities" & either short or long term gains. However, a portion of the proceeds is showing as "Box 6 Non-Covered Securities" and it doesn't show a cost basis or date of acquisition. How do I record this?

TurboTax Premier Online

TomYoung

Alumni - Champ

You probably will not like this answer - many people don't - but you get that information from your own records, just like investors have been doing for decades.

The concept of "covered" and "noncovered" securities is very recent and is being phased in, so 1099-B's will continue to report certain sales as noncovered for many years to come.

TurboTax Premier has some assistance available that may be able to come up with a reasonable estimate of basis, but you still need to know an acquisition date for the best accuracy. EDIT: as of the 2014 tax year TurboTax dropped this support.

To reconstruct your basis in the noncovered securities you need to go through old broker's statements - most are now available online - for any securities you purchased directly. Inherited securities have a basis that's the fair market value of the securities at date of death and securities received via "gifts" retain the basis of the donor. And, of course, there's other ways you might acquire securities, too, with yet other basis considerations.

If you can't figure out your basis you might ask a new question, disclosing the security sold and whatever information you do have to see if somebody can assist.

Finally, understand that if you can't really develop a basis that would withstand IRS scrutiny then you pretty much have to use a basis of $0. This results in all the proceeds being taxed, which is not as bad as it sounds because if the holding is long term - as probably most noncovered securities are - the the most likely tax rate is 0% or 15%, which is fairly modest.

You record a noncovered security using the 1099-B interview and providing your own date of acquisition, (if it's not reported on the 1099-B) and your own determination of the security's basis.

Tom Young

Anonymous

I have the same problem as ryan.watt. If I understand correctly I have to download or review all transactions from my broker.In my case the dates run from 01 jan 2005 to 20 dec 2011 then try to average all the securities.

jill11_2

Level 2

For non-covered securities - what this means (regardless if long or short term) is that the broker is not providing the cost basis. You need to provide it. they just handled the sale. If you know when you purchased the security, you can look up the cost basis at - http://www.marketwatch.com/tools/quotes/historical.asp There are other sites out there, but this is the one I used.

Took me awhile to figure it out - see below

In Turbotax - for the 1099-B

box A - short term covered
box B - Short term non-covered
box D - long term covered
box E - long term non-covered

klevenms

Level 2

This was a little more complicated than usual because the sale (and cost basis) was in 2013. As part of sale agreement, additional, milestone payments will continue for subsequent years, so the original cost basis isn't relevant. The best advice I could find is to use zero as the cost basis.

kpaskiewicz

Level 2

Your right, don't like the answer but can live with it. It's all long term.

ColeenD3

Level 15

Inherited property is always long term.

JJPA

Level 2

I have been reading this strand and it is very helpful; however, I am still having trouble with entering the information. I am doing an estate return and I have a 1099-B. The form has a summary part that lists the Long Term Noncovered and then Long Term Covered and Noncovered (and provides the basis). In the TOTAL REPORTABLE AMOUNTS section it lists the total PROCEEDS (box d) and then the TOTAL Reportable Cost or Other Basis (box 1e). When entering into Turbo tax where do I enter the NON-REPORTABLE basis to bring the taxable amount down to where it should be?

Do you just add it to the box 1e?

ThomasM125

Level 15

When you enter a form 1099-B in TurboTax, if the cost basis is not correct, you should enter it as listed on the form, then click on the "I'll enter additional info on my own" tab to enter the correct cost basis.

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2997

Level 2

How do I obtain the Acquired date and cost Basis

tomandjerry1

Level 5

As Tom has indicated in his entry above, "It's impossible for anyone here to answer your particular question "definitively." ". For your question, "the Acquired date and cost Basis" depends on what has been sold and how it was acquired. If this is just a sale of a security which you purchased in a single transaction on some prior occasion and the broker that's made the sale has not supplied the date and cost from the original transaction, then you'll need to consult the settlement statement (or account statements) from when you made the purchase. If you're selling an aggregate quantity of shares which were acquired on different dates, for varying purchase amounts, then you'll need to gather this from the separate settlement statements you received when making these purchases (which should also appear on you brokerage's account statements). You would then report the sales for each set of securities using the corresponding date and cost. The trickiest situation is when you've sold a mutual fund which you've purchased in different amounts at different times and which has then reinvested the dividends the fund pays to add to the shares you own. In this case I'd refer you to the vast collection of on-line articles you'll uncover by Google'ing "How do you calculate the cost basis for a mutual fund over a long time period" -- start with www.investopedia.com.

David powell

Level 2

Can I claim zero for cost basis for noncovered securities sold if I am unable to determine cost basis. This was for a fractional share sold through a drip?

PattiF

Level 15

You could claim $0 for the cost basis of the fractional share. If the proceeds are a minimal amount, a cost basis of $0 is reasonable.

@David powell

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pmjm2

Level 2

Non-covered sale of Stock.

Where are the proceeds

HelenC12

Level 15

To enter your 1099-B form, see Where do I enter or import a 1099-B?

The proceeds are reported on your 1099-B Box 1d Proceeds.

If you're asking where did your employer give you the money, it was included in your wages. See your W-2 Box 1.

For noncovered securities, you are responsible for reporting cost basis information to the IRS when you file your taxes. If you do not report your cost basis to the IRS, the IRS considers your securities to have been sold at a 100% capital gain, which can result in a higher tax liability.